Latest / Liberty + Leadership / What Can Economic History Teach Us About the Future?

Transcript

What Can Economic History Teach Us About the Future? · Liberty + Leadership

• 0:00
  SPEAKER_00: Welcome to the Liberty and Leadership Podcast, a conversation with TFAS alumni, faculty, and friends who are making an impact today.
• 0:10
  SPEAKER_00: I'm your host, Roger Ream.
• 0:13
  SPEAKER_00: I'm pleased to welcome Professor Robert Wapels to the Liberty and Leadership Podcast.
• 0:19
  SPEAKER_00: Dr.
• 0:19
  SPEAKER_00: Waples is a professor of economics at Wake Forest University and a longtime teacher with the Foundation for Teaching Economics, TFAS's high school division.
• 0:31
  SPEAKER_00: Dr.
• 0:32
  SPEAKER_00: Wapels has spent his career studying economic history with research focused on historical American labor markets and consensus among economists.
• 0:43
  SPEAKER_00: His dissertation on the shortening of the work week won the Alan Nevins Prize from the Economic History Association.
• 0:50
  SPEAKER_00: And he later received the Youse Prize for Excellence in Teaching Economic History.
• 0:56
  SPEAKER_00: Robert is editor of the Independent Review, a journal of political economy.
• 1:02
  SPEAKER_00: And he's co-editor of the Ruidge Handbook of Modern Economic History and the Ruolidge Handbook of Major Events in American history.
• 1:11
  SPEAKER_00: Robert, welcome to the show.
• 1:13
  SPEAKER_00: Thank you for having me on.
• 1:14
  SPEAKER_00: Before we go any further, I need to ask you to explain a line in your biography that I just read that says that your research is focused on American labor markets and consensus among economists.
• 1:27
  SPEAKER_00: I'm curious, what does consensus among economists refer to?
• 1:31
  SPEAKER_01: Yeah, you know how Harry Truman said, you know, you economists keep saying on the one hand and on the other hand, and give me a one-handed economist.
• 1:39
  SPEAKER_01: But it turns out that economists do agree on some things and don't on others.
• 1:43
  SPEAKER_01: And so what I did was simply what I have done in a number of studies is simply to send questionnaires out to economists on important policy issues and historical issues, various issues, and just seen what the lay of the land was so we can kind of quantify what percentage of the people agree with this proposition, what percent disagree, who's neutral, that kind of thing.
• 2:03
  SPEAKER_00: Have you found over time, I don't know how long you've been doing this for, but over time has the consensus broken down more, or are there still some broad areas of consensus among economists?
• 2:14
  SPEAKER_01: There are definitely some very broad areas of consensus.
• 2:17
  SPEAKER_01: One of the most longstanding is on trade, on the economics of trade.
• 2:22
  SPEAKER_01: It's 90 plus percent of economists who believe there are gains from trade.
• 2:27
  SPEAKER_01: So we stick with our guns on that one.
• 2:29
  SPEAKER_00: Good, good.
• 2:30
  SPEAKER_00: I know it's broken down maybe somewhat on the view on minimum wages, but maybe not as much as I worry it has.
• 2:36
  SPEAKER_00: You've dedicated your career to both the science of economics, I'll call it, and as well as economic history.
• 2:44
  SPEAKER_00: I was in a conversation just the other night at a dinner party where we were talking about the distinction between studying economic history and studying the history of economic thought, which are two different areas of study.
• 2:57
  SPEAKER_00: But is economic history often taught in economics, or do you teach some of those courses in the history department there at Wake Forest?
• 3:04
  SPEAKER_01: It turns out before I came to Wake Forest, I taught for three years in the history department at the University of Wisconsin-Milwaukee.
• 3:11
  SPEAKER_01: But that is a very exceptional thing.
• 3:13
  SPEAKER_01: And so back in the day, it was believed that to be a full-fledged economist, you needed to know a little bit of history and a little bit of the history of the discipline.
• 3:24
  SPEAKER_01: That kind of disappeared.
• 3:25
  SPEAKER_01: So I think I'm about the last cohort for graduate school.
• 3:29
  SPEAKER_01: And that was back, you know, I got I was there in the 1980s.
• 3:32
  SPEAKER_01: The last cohort where they required you to take one or the other.
• 3:36
  SPEAKER_01: I actually took both.
• 3:38
  SPEAKER_01: And now in my career, I actually teach both the history of the economy and the history of economics itself.
• 3:46
  SPEAKER_00: We had a longtime professor of ours at TFAS who was on the faculty at Georgetown University.
• 3:52
  SPEAKER_00: And I remember one day him telling me that at Georgetown in the economics department, there was no longer anyone there who studied economic theory, that nobody there who read, you know, Keynes or much less, you know, Hayek or Schumpeter.
• 4:09
  SPEAKER_00: They were all mathematicians and doing uh regressions.
• 4:13
  SPEAKER_00: And he much favored having economics professors who taught some of that theory and with the original sources.
• 4:20
  SPEAKER_00: But in the history of economic thought, that's where you would encounter some of those.
• 4:24
  SPEAKER_01: I am a believer that you should push all margins until you get to about equality.
• 4:32
  SPEAKER_01: And what I mean by that is like you should learn as much as you could in every area until the marginal value of what you learn in each area is equal to about the same amount.
• 4:42
  SPEAKER_01: And by not teaching economic history, by not studying the history of the economics profession, we've left massive holes in people's knowledge.
• 4:51
  SPEAKER_01: And they could learn so much so fast that's so valuable, rather than a tiny little bit of more that they're going to gain from studying economic theory, you know, with all the math and all that.
• 5:02
  SPEAKER_00: Yeah.
• 5:03
  SPEAKER_00: As I recall you were a double major in economics and history as an undergraduate.
• 5:07
  SPEAKER_00: What kind of sparked your interest in kind of combining the two and focusing on it?
• 5:11
  SPEAKER_01: Yeah.
• 5:12
  SPEAKER_01: So I've always been interested in numbers.
• 5:15
  SPEAKER_01: And when I was seven years old, I got sick, I had the flu, was at home for a while, and this book showed up.
• 5:23
  SPEAKER_01: Here's the book.
• 5:25
  SPEAKER_01: Wow.
• 5:25
  SPEAKER_01: These United States from the Reader's Digest.
• 5:28
  SPEAKER_01: My mom bought it, and I just ate the book up.
• 5:32
  SPEAKER_01: It was all these maps and all these numbers and stuff.
• 5:36
  SPEAKER_01: By the end of the week, I had the 50 states memorized in alphabetical order.
• 5:40
  SPEAKER_01: And it had, look at the data it had in it.
• 5:43
  SPEAKER_01: It had these maps with all sorts of numbers for each state on how much they're producing, automobiles, steel, coal, all these.
• 5:51
  SPEAKER_01: I was hooked.
• 5:52
  SPEAKER_01: I think that that's what made me become the economist, the economic historian that I became.
• 5:58
  SPEAKER_01: And so, and of course, I grew up during much of the 1970s, and the economy was in the news all the time.
• 6:05
  SPEAKER_01: It was, you know, inflation and wage and price controls.
• 6:08
  SPEAKER_01: The misery index and oh, all those kinds of things.
• 6:11
  SPEAKER_01: And so by the time I got to college, I went to the University of Maryland, and we had to declare our major even before we set foot on campus.
• 6:20
  SPEAKER_01: Okay.
• 6:20
  SPEAKER_01: And I was like, what?
• 6:22
  SPEAKER_01: Economics sounds interesting.
• 6:24
  SPEAKER_01: So I then took the classes and I was, yeah, yeah, this really appeals to me.
• 6:28
  SPEAKER_01: I think one thing that really appealed to me is the working assumption of economics, and that is that people are rational, that we not only should, but do kind of weigh off the costs and benefits of things in making our decisions.
• 6:44
  SPEAKER_01: And so it's just good common sense.
• 6:46
  SPEAKER_01: And you know, I think God gave us that ability and we use it.
• 6:49
  SPEAKER_01: And I'm glad economists have built their profession around that assumption.
• 6:53
  SPEAKER_00: Aaron Powell I mentioned in the opening that your dissertation won a a prize and it focused on the work week.
• 7:00
  SPEAKER_00: Could you kind of summarize a little bit of what that was about?
• 7:03
  SPEAKER_00: Because that sounded interesting.
• 7:04
  SPEAKER_01: So way back middle of the 1800s, when they first were keeping a little bit of records on this, the average length of the work week in the U.S.
• 7:12
  SPEAKER_01: was about 70 hours.
• 7:15
  SPEAKER_01: And you got Sunday off because they respected that.
• 7:18
  SPEAKER_01: So that's working a lot of hours six days a week.
• 7:21
  SPEAKER_01: Twelve hours a week.
• 7:22
  SPEAKER_01: And then it slowly came down and came down.
• 7:24
  SPEAKER_01: And so what I did in my dissertation was, you know, bring together statistics on that, but then also try to figure out what were the main driving forces behind it.
• 7:33
  SPEAKER_01: And like almost everything in economics, it boils down to supply and demand.
• 7:37
  SPEAKER_01: And so the supply is us workers, you know, how many hours do you want to work?
• 7:43
  SPEAKER_01: And then the demand is the employers, and they come to an agreement in a competitive labor market about what the terms of work will be, what the hours will be, what the pay will be, what the work conditions will be.
• 7:55
  SPEAKER_01: But what I did was collect data on a whole range of cities, and then separately a whole range of industries, and looked at kind of the key period in the early 1900s when the hours were falling the most to quantitatively estimate what were the most important factors.
• 8:10
  SPEAKER_01: What I discovered was it's not unions, you know, that little bumper sticker.
• 8:15
  SPEAKER_01: Thank you, unions, who gave us the weekend.
• 8:17
  SPEAKER_01: Okay, no.
• 8:18
  SPEAKER_01: It turned out that wasn't what was driving this.
• 8:21
  SPEAKER_01: There's a little part to be played by the unions, but it's mainly the rising productivity in the economy.
• 8:27
  SPEAKER_01: We keep coming up with these better institutions and better technologies that make us more productive.
• 8:32
  SPEAKER_01: And when people become more productive, their employers will pay them more.
• 8:35
  SPEAKER_01: And the workers were like, we don't only want pay, we'd also like a little bit of free time.
• 8:40
  SPEAKER_01: And so during this period, uh there was an elasticity of about negative 0.1.
• 8:45
  SPEAKER_01: So every time your wage went up by, let's say, 10%, you'd want your hours to go down by about 1%.
• 8:52
  SPEAKER_01: So that was one of the main things driving it.
• 8:54
  SPEAKER_01: There were also some uh key technological changes.
• 8:57
  SPEAKER_01: I also surprisingly found that uh when electrification came along, the businesses did not need to have these giant steam engines, which are very capital-intensive, very expensive.
• 9:08
  SPEAKER_01: And so they didn't have to spread those costs out, you know, the same way, trying to use their capital as intensively as possible, needing a really long shift.
• 9:16
  SPEAKER_01: Now that they could buy the electricity, there was a little bit less of that going on.
• 9:19
  SPEAKER_01: And so that actually allowed workers to get a little more leisure, a little more free time.
• 9:24
  SPEAKER_00: Aaron Powell So around 1800, we were 70 hours a week.
• 9:27
  SPEAKER_00: Where are we now?
• 9:28
  SPEAKER_00: Are we below 40?
• 9:29
  SPEAKER_00: Are we more like 36 now?
• 9:30
  SPEAKER_01: Yeah, it's a little harder to measure, right?
• 9:33
  SPEAKER_01: Because it used to be everybody worked full-time, and now we got part-time workers.
• 9:38
  SPEAKER_01: Among the full-time workers, it's kind of in the mid-30s, somewhere like that.
• 9:42
  SPEAKER_01: And really hasn't changed for decades because I think people got to the point where uh, you know, the extra hour of leisure just isn't as important to me as it was when I had almost no leisure 200 years ago and was working like a dog.
• 9:55
  SPEAKER_01: No, the extra leisure, what am I gonna do?
• 9:58
  SPEAKER_01: I'm gonna watch another scroll online for another hour, whatever.
• 10:01
  SPEAKER_01: And so I'm you know, happy to work and get some money to buy some other stuff.
• 10:05
  SPEAKER_00: Yeah, and for many people in professions like myself, our leisure and work weeks are very mixed.
• 10:12
  SPEAKER_00: You're answering emails on Saturday or Sunday, you're ordering your United Airline tickets for your vacation from the office on Wednesday, and it all kind of mixes together much more.
• 10:22
  SPEAKER_00: I saw a chart about 20 years ago, I think it was Michael Cox at the Dallas Fed had it, and it was the use of eBay at the time, which was the big online shopping market, peaked every weekday around one o'clock.
• 10:36
  SPEAKER_00: So it was workers at their desks at work doing personal things.
• 10:40
  SPEAKER_00: And uh so we've seen that change as well.
• 10:42
  SPEAKER_00: And now with remote working, it's changed a lot more, I guess.
• 10:46
  SPEAKER_00: You wrote a very interesting piece in the Independent Review, which I should hold up again.
• 10:52
  SPEAKER_00: It's a it's a great journal.
• 10:54
  SPEAKER_01: I'll hold it up too.
• 10:56
  SPEAKER_01: Same issue.
• 10:57
  SPEAKER_01: There you go.
• 10:58
  unknown: Yeah.
• 10:58
  SPEAKER_01: I've been editing it now for uh 13 years.
• 11:01
  SPEAKER_00: So you had a piece in there in 2022 about the concentration of wealth.
• 11:06
  SPEAKER_00: You noted that the poorest 5% of Americans are in about the 68th percentile globally in terms of income distribution.
• 11:16
  SPEAKER_00: I think that was citing 2010 statistics, and you had some interesting observations about that.
• 11:20
  SPEAKER_00: Could you talk about that a little bit?
• 11:22
  SPEAKER_01: Yeah.
• 11:22
  SPEAKER_01: So this article was titled, Where Did the Poorest Americans Stand in the Income Distribution of All People Ever Born?
• 11:30
  SPEAKER_01: So, you know, it's estimated there's been about 117 billion human beings who walk the face of the globe.
• 11:37
  SPEAKER_01: And I cobbled together estimates historically on what standards of living were.
• 11:41
  SPEAKER_01: Back in the old days, everybody was a hunter-gatherer, and their kind of income equivalent of what they earn today was very, very low.
• 11:49
  SPEAKER_01: And then I also got statistics on what the poorest 5% of Americans, not what they earn in the labor market, but what their total consumption is, because most of the money they get is actually redistribution from government programs.
• 12:03
  SPEAKER_01: So when I put everything together, I estimated, looking at all these different time periods, that there's only been about six billion human beings with a higher income level than the poorest five percent of Americans living today.
• 12:20
  SPEAKER_01: So six billion out of 117 billion.
• 12:24
  SPEAKER_01: The poorest Americans, the bottom five percent, are at uh income level that's higher than 95% of all the people who've ever lived.
• 12:33
  SPEAKER_01: That is an astounding fact.
• 12:35
  SPEAKER_00: Aaron Powell You know, throughout history, new technologies have made us more productive, have disrupted labor markets, created new opportunities for people, moved people from the farm and agriculture into industry and into tech.
• 12:48
  SPEAKER_00: Have you put much thought into how AI is going to impact the economy and the way we live?
• 12:55
  SPEAKER_01: Aaron Powell I have been thinking about this.
• 12:57
  SPEAKER_01: I not only teach an American economic history class and a history of economics class and the introduction to economics class, but also a current economic issues class.
• 13:06
  SPEAKER_01: And so that's something students really want to talk about.
• 13:09
  SPEAKER_01: And my take on it, you know, we're obviously in the very early stages of how AI is affecting the economy, but it looks to me like another chapter in the long string of productivity improvements that we've seen.
• 13:23
  SPEAKER_01: And what those productivity improvements did was make workers more productive.
• 13:28
  SPEAKER_01: And when workers are more productive in a competitive labor market, their employers have to pay them more.
• 13:33
  SPEAKER_01: And so I think it will probably play out the same way that boosting productivity boosts income levels in the United States.
• 13:41
  SPEAKER_01: But whenever a new technology like this comes along, it's not just that, it's also a matter of some groups being affected positively by it, other groups being affected negatively by it.
• 13:53
  SPEAKER_01: If AI is a substitute for you, okay, you're not gonna do as well.
• 13:57
  SPEAKER_01: But if AI is a complement for you and it makes you more productive and you can use it in your job, you'll end up getting paid more from it.
• 14:05
  SPEAKER_01: I doubt that it's gonna have much effect on the overall employment level.
• 14:09
  SPEAKER_01: It doesn't look like the other technologies that have come along have, except that they've allowed us to enjoy more leisure throughout the course of our life.
• 14:18
  SPEAKER_01: We're to that point where we don't want the labor week to get shorter much, but we keep living longer, and we don't even really retire sooner.
• 14:26
  SPEAKER_01: That that kind of has plateaued out as well.
• 14:28
  SPEAKER_01: But we'll see.
• 14:29
  SPEAKER_01: Maybe the labor force participation rate will drop.
• 14:32
  SPEAKER_01: Some people will just drop out of the labor market, they'll have the ability to do that, or maybe we'll be pushed out.
• 14:37
  SPEAKER_01: I'm not quite sure.
• 14:38
  SPEAKER_00: We have a bit of a political fight going on in Washington, D.C.
• 14:42
  SPEAKER_00: right now over whether to allow Waymo's to come into the city, driverless cars.
• 14:47
  SPEAKER_00: I know there's been resistance in a lot of places to driverless cars, even though the evidence seems to show they would be not only more efficient, but probably safer.
• 14:56
  SPEAKER_00: And at the same time, you feel for people who depend on their income as taxi or Uber drivers that they might be impacted by this.
• 15:04
  SPEAKER_00: But that's just another example of this, I guess, is new technology that's more productive, displacing people, and then they have to find other jobs.
• 15:14
  SPEAKER_01: We don't know what the impact of these things is going to be.
• 15:17
  SPEAKER_01: Um we don't know really how this new technology is even going to get used.
• 15:21
  SPEAKER_01: We discover it.
• 15:22
  SPEAKER_01: That's what the market process is, a discovery mechanism.
• 15:25
  SPEAKER_01: And so ahead of time, it's almost impossible to tell, although we rely on history, and we've seen similar things happen in the past, and that's where most of my projection comes from.
• 15:36
  SPEAKER_01: Historically, things have played out so that workers have become more productive overall after the transitions, and therefore been able to enjoy a higher standard of living.
• 15:46
  SPEAKER_00: You've been teaching at Wake Forest for some time.
• 15:49
  SPEAKER_00: Is there a lot of interest in students there and taking economics?
• 15:52
  SPEAKER_00: And are you getting kids who want to major in it?
• 15:55
  SPEAKER_01: We're like packed to the gills here.
• 15:58
  SPEAKER_01: So many people want to major in economics.
• 16:00
  SPEAKER_01: Every one of our classes spills up just like that.
• 16:02
  SPEAKER_00: I suspect it has a reflection in part on how introduction to economics is taught.
• 16:07
  SPEAKER_00: I've always been concerned about that.
• 16:09
  SPEAKER_00: I I have three daughters, and I required each of them to take an economics course, which two did at the University of Virginia, and that was the only economics course they took.
• 16:19
  SPEAKER_00: And then one went to Davidson and ended up double majoring in economics and history like you.
• 16:24
  SPEAKER_00: You're familiar, of course, with Paul Hain.
• 16:26
  SPEAKER_00: He was a great influence on FTE in the past, the late economist from University of Washington.
• 16:31
  SPEAKER_00: And I remember he used to say that you should teach an introduction economics, not as if it is the first course a student will take on the way to a PhD, but if it's the last course in economics they'll ever take.
• 16:44
  SPEAKER_00: I suspect that's how you teach it in a way that it explains the way the world works.
• 16:48
  SPEAKER_00: How do you approach the teaching of that introduction to economics?
• 16:51
  SPEAKER_00: Trevor Burrus, Jr.
• 16:51
  SPEAKER_01: I thoroughly agree with that.
• 16:53
  SPEAKER_01: So the way I approach it is to explain that what economics is, it's a series of tools.
• 17:00
  SPEAKER_01: It's like a toolbox to help you solve various problems.
• 17:04
  SPEAKER_01: Luckily, the class we have at Wake Forest is both macro and microeconomics in one semester, so they will just get part of the story.
• 17:12
  SPEAKER_01: But not only do I want to give them these tools that they can use in their everyday life and in future classes, but also I want to give them as much knowledge as they can get about how the economy performs, how it's performed historically, how it's performed today.
• 17:26
  SPEAKER_01: And I told you I'm a numbers guy, and so I just give my students a lot of numbers to look at, but I also want them to see the big picture.
• 17:33
  SPEAKER_01: And so I stress certain key points throughout the semester repeatedly.
• 17:38
  SPEAKER_01: I've got a top 10 lessons from economics sheet that I pull out on the last day, and we go through the big things that they've learned.
• 17:45
  SPEAKER_00: You told a story once at a conference I attended about starting to teach a class that's just that day in the summer school, and you said you began the class by asking the students if it would be all right to say a prayer, and you offered a prayer for the success of the class and for success as a professor teaching them and and hope that they would learn a lot.
• 18:07
  SPEAKER_00: I found that fascinating, and I thought it would be nice if you'd share that.
• 18:11
  SPEAKER_01: I was raised by good religious parents, and then I went off the reservation, right?
• 18:16
  SPEAKER_01: When I got to college, I became an atheist.
• 18:19
  SPEAKER_01: I was like, well, all the smart people are atheists.
• 18:22
  SPEAKER_01: Okay.
• 18:23
  SPEAKER_01: Later in life, I decided that I maybe didn't quite know what I was talking about.
• 18:27
  SPEAKER_01: I hadn't been baptized.
• 18:28
  SPEAKER_01: So in my mid-30s, I was baptized, and I said to myself, I I don't want these students to fall into that same trap, that same mistake that I did.
• 18:38
  SPEAKER_01: And the president of our university at the time had a speech in which he said that, you know, Wake Forest University was founded by the Baptists.
• 18:46
  SPEAKER_01: I'm not a Baptist, but you know, founded by Baptists.
• 18:49
  SPEAKER_01: And we don't, even though we've ended our ties with the Baptists, we still want to keep that same heritage.
• 18:56
  SPEAKER_01: And I thought to myself, that's a green light.
• 18:59
  SPEAKER_01: I need to share a little bit of my faith with students.
• 19:02
  SPEAKER_01: And so I know that in your face this is the exact wrong approach for students.
• 19:07
  SPEAKER_01: And so I do.
• 19:08
  SPEAKER_01: I just open the semester with a brief prayer, and then the very last day, right at the end of that class, I say a very brief prayer as well.
• 19:15
  SPEAKER_01: And the prayer is totally non-denominational.
• 19:18
  SPEAKER_01: It's kind of Almighty God, thank you for bringing us together to learn economics.
• 19:22
  SPEAKER_01: We ask you to guide us and guard us throughout the semester, throughout our lives, and throughout eternity.
• 19:28
  SPEAKER_01: And so I I leave it at that.
• 19:30
  SPEAKER_01: And uh many students have come up and thanked me for this.
• 19:33
  SPEAKER_01: Uh, and I've only had like one complaint in in the, I don't know, 25 years or something I've been doing this.
• 19:38
  SPEAKER_00: So at a university founded by Baptists.
• 19:41
  SPEAKER_00: That's interesting.
• 19:42
  SPEAKER_00: That's I think brave.
• 19:43
  SPEAKER_00: Aaron Powell In your courses on economic history, are they a survey of the history of the United States, or do you take bite-sized chunks of certain periods?
• 19:52
  SPEAKER_01: Yeah, that class is looking at the history of the United States, kind of emphasizing, well, obviously showing the big picture, but then emphasizing some things in much greater detail, with the Great Depression obviously being one of those.
• 20:05
  SPEAKER_01: And in fact, I think learning about the Great Depression is so important that in my introduction to economics class, so there's only 42 class meetings, and one of those says all about the Great Depression, because I know that the textbooks have gotten it wrong and students have been told exactly the wrong lessons about it.
• 20:22
  SPEAKER_01: And I try to inject as much economic history into my class as is warranted.
• 20:27
  SPEAKER_00: I recall one of my more frustrating moments as a student at Vanderbilt in taking a course on the economic history of the U.S.
• 20:34
  SPEAKER_00: I chose to write my, I think it was my midterm on the causes of the Great Depression.
• 20:39
  SPEAKER_00: And I used as my primary text Murray Rothbard's America's Great Depression, put forward some of his arguments about things that Hoover did wrong and trying to keep wages up when they should have let wages fall.
• 20:52
  SPEAKER_00: And my professor wasn't too keen about my argument.
• 20:55
  SPEAKER_00: He didn't take it out on me so much, but he said, you know, it's an interesting thesis.
• 20:59
  SPEAKER_00: Historians yet haven't gotten around to dismissing his arguments or something like that.
• 21:04
  SPEAKER_00: But and maybe Friedman had a little bit different argument and uh maybe a better one.
• 21:10
  SPEAKER_00: But there are interesting moments in history.
• 21:12
  SPEAKER_00: I mean, I I recall as a history major looking at, you know, the economics of slavery and would slavery have eventually disappeared because the economics wouldn't work, or there's the period of Andrew Jackson, which I know you've written about and the results of his policies.
• 21:28
  SPEAKER_00: What are those key moments?
• 21:29
  SPEAKER_01: Aaron Powell Let me talk about what we do in the FTE program.
• 21:33
  SPEAKER_01: And I've got my little I'm wearing my FTE shirt today.
• 21:36
  SPEAKER_01: There you go.
• 21:36
  SPEAKER_01: Yes.
• 21:37
  SPEAKER_01: The program mainly actually involves high school teachers.
• 21:41
  SPEAKER_01: There's a program as well with the high school students, but usually I'm doing this program with high school teachers, and then they're going to teach this right to their students to have a much bigger impact.
• 21:51
  SPEAKER_01: And so in that program, there's 14 hour long lectures, and then there's QA and whatever afterwards on What we consider to be the most important of the lessons that people are going to get.
• 22:03
  SPEAKER_01: One of them is on the economics of emancipation.
• 22:06
  SPEAKER_01: There's two that are tied to the Great Depression and then the New Deal as a follow-up.
• 22:10
  SPEAKER_01: There's one on the economics of war and, you know, various other topics.
• 22:14
  SPEAKER_01: And so these high school teachers who are in this program are not only there to learn, but they are so knowledgeable.
• 22:23
  SPEAKER_01: It just boggles my brain.
• 22:25
  SPEAKER_00: In that program, do you get in at all to, you know, public choice?
• 22:29
  SPEAKER_01: Aaron Powell Not formally, but implicitly, you know, when we're talking about things like the New Deal, for example, and how it played out, or banking and, you know, why we had some regulations that didn't work so well.
• 22:41
  SPEAKER_01: Definitely get into that public choice.
• 22:42
  SPEAKER_01: And you know, that's one thing that is still missing in so much of economic education.
• 22:47
  SPEAKER_01: In a introduction to economics textbook, they say almost nothing about public choice economics.
• 22:53
  SPEAKER_01: I make sure to spend an entire class explaining kind of the entire political economic equilibrium that works out, you know, and how you would approach that.
• 23:03
  SPEAKER_01: That the people we are modeling going to the grocery store are the same people we should be modeling going to the voting booth, right?
• 23:10
  SPEAKER_01: They're these rational people who are weighing off costs and benefits.
• 23:13
  SPEAKER_00: Aaron Powell or the people running a regulatory program in governments, exactly right.
• 23:17
  SPEAKER_01: And you've got to think about their interests and exactly.
• 23:20
  SPEAKER_01: Trevor Burrus, Jr.
• 23:20
  SPEAKER_00: You have a piece on it's devoted really to falling fertility rates.
• 23:25
  SPEAKER_00: That is a concern we hear a lot about lately, especially in the West, in the United States, and Europe.
• 23:31
  SPEAKER_00: Why is it important for economists to pay attention to falling birth rates and what are the economic consequences of this, do you think?
• 23:38
  SPEAKER_01: Aaron Powell The numbers are actually just very striking.
• 23:42
  SPEAKER_01: The total fertility rate in the United States most recently has dropped a little bit below 1.6, so 1.6 children will be born to the typical woman.
• 23:54
  SPEAKER_01: And of course, you need something a little bit over two to reach the replacement rate.
• 23:59
  SPEAKER_01: Not only that, though, 70% of the people in the world live in countries that are below that replacement rate.
• 24:07
  SPEAKER_01: Obviously, the United States, Europe, China, India has now joined that list.
• 24:12
  SPEAKER_01: More and more countries are on that list.
• 24:14
  SPEAKER_01: And so it's been calculated that as of 2024, the world as a whole fell below the replacement rate.
• 24:23
  SPEAKER_01: That would imply that in about 30 years, the world's population will peak and then will probably start falling if these rates stay low, and it looks like they will.
• 24:34
  SPEAKER_01: So maybe even within my lifetime, maybe I'll live another 30 years, uh, the world's population could reach its peak and start going down.
• 24:42
  SPEAKER_01: That could have some big impacts.
• 24:44
  SPEAKER_01: And so the first one that jumps to mind is what's that going to do with all our government finances?
• 24:49
  SPEAKER_01: And there's a good article in that issue of the Independent Review by Véronique De Rougy on, you know, all the fiscal mess that we have set up for ourselves because we keep spending more and we keep assuming that there'll be more taxpayers coming along to pay off for all that borrowing that we've racked up.
• 25:06
  SPEAKER_01: But that's probably not the way it's gonna turn out.
• 25:09
  SPEAKER_01: The Congressional Budget Office projects that our debt to GDP ratio is just gonna go through the roof, and they're too optimistic because there's fewer people gonna be born and there's gonna be a higher and higher percentage of the population who are elderly.
• 25:21
  SPEAKER_01: So we got to do something soon to rein that in.
• 25:25
  SPEAKER_01: And the solutions aren't very popular.
• 25:28
  SPEAKER_01: That means increasing taxes or cutting benefits or just boring more and more until our credit rating gets shot.
• 25:34
  SPEAKER_01: Okay.
• 25:35
  SPEAKER_01: Hmm.
• 25:36
  SPEAKER_01: A second problem, though, and I think maybe at a deeper level, is that more people are probably a good thing.
• 25:43
  SPEAKER_01: So I take a very Simon-esque outlook on this.
• 25:46
  SPEAKER_01: Julian Simon, he wrote this book called The Ultimate Resource.
• 25:50
  SPEAKER_01: The ultimate resource is not oil.
• 25:53
  SPEAKER_01: Human people, exactly, human beings in our brains.
• 25:57
  SPEAKER_01: And so more and more people are coming up with more and more great ideas, and that's allowed us to actually continue to have economic growth even as we use up some of the world's resources.
• 26:08
  SPEAKER_01: And so we won't be able to tackle those problems as well in the future if we have fewer people around.
• 26:14
  SPEAKER_01: I would add to that, though, that I know parenting changed me in such fundamental ways and made me a better person, made me a more, you know, giving, less selfish person.
• 26:28
  SPEAKER_01: And so that's one of the main benefits of having children around, to love them up, but of course, it makes you a better person.
• 26:35
  SPEAKER_01: And what a loss if we stop having kids.
• 26:37
  SPEAKER_01: And then finally, and this is what I stress in the article I have in this symposium, you know, Robert Higgs' argument about crisis and Leviathan.
• 26:45
  SPEAKER_01: Whenever there's a crisis, World War I, World War II, Great Depression, whatever, we ask the government to come in and solve that crisis, and then it gets bigger and doesn't shrink back down.
• 26:54
  SPEAKER_01: It keeps getting bigger and bigger.
• 26:56
  SPEAKER_01: And this is being spun as a crisis, and people are going to invite the government to come in and solve this.
• 27:01
  SPEAKER_01: Maybe people will have kids if we just give them free daycare from day one, and then the state or its agents will be raising our children even more than they already are.
• 27:13
  SPEAKER_01: Yeah, okay.
• 27:13
  SPEAKER_01: Yeah.
• 27:14
  SPEAKER_01: And you know, you can spin this out into the far distant future in a kind of brave new world kind of setup.
• 27:20
  SPEAKER_00: Aaron Powell It seems like one solution, not popular right now for a particular country like the US would be more immigration.
• 27:28
  SPEAKER_00: That doesn't impact the global issue of fertility rates that have fallen, it just shifts it.
• 27:33
  SPEAKER_01: Aaron Powell We will be able to attract immigrants long after the world's population is shrinking because we are so productive and people would love to move here and you know get the higher standard of living that you can get.
• 27:44
  SPEAKER_00: Yeah.
• 27:45
  SPEAKER_00: And I guess some countries have taken to, I know some of the in the in some of the Baltics at least, if not all three, they have just tremendous, you know, one year of maternity leave for a woman if she has a baby or even more, you know, great benefits, great incentives that way to try to encourage women.
• 28:01
  SPEAKER_01: Aaron Powell And what you'd usually find from those incentives is they lead to marginal changes, but they don't reverse this trend at all.
• 28:09
  SPEAKER_01: And so when I discuss fertility rates and demographics with students, I kind of bring in the two old models.
• 28:18
  SPEAKER_01: You know, one is that those kids are there, they're like a refrigerator.
• 28:24
  SPEAKER_01: You buy a refrigerator and you expect a flow of services for it many years into the future.
• 28:29
  SPEAKER_01: So you have kids and maybe you'll put them to work on the farm, or when you're old, they'll take care of you.
• 28:35
  SPEAKER_01: Okay, that was a traditional, strong reason to have kids.
• 28:38
  SPEAKER_01: But the second thing is that children aren't just an investment, they're a consumption item.
• 28:43
  SPEAKER_01: They're like a pet.
• 28:44
  SPEAKER_01: I put up a picture of a little dog on the screen.
• 28:47
  SPEAKER_01: And so, which one is it?
• 28:49
  SPEAKER_01: Are your kids more like these refrigerators or like these pets?
• 28:52
  SPEAKER_01: You just like having the pet around.
• 28:54
  SPEAKER_01: Well, these days, it's neither, none of the above.
• 28:57
  SPEAKER_01: I don't need this kid to take care of me.
• 28:59
  SPEAKER_01: You know, I got the state or the financial markets that'll take care of me.
• 29:04
  SPEAKER_01: And pets, I don't know, pets tie you down.
• 29:07
  SPEAKER_01: I don't want that.
• 29:08
  SPEAKER_01: Children are more like a disease, something I don't want.
• 29:12
  SPEAKER_01: And it's that change in mindset that's really driving it.
• 29:15
  SPEAKER_01: The studies that I cite in that paper show that there aren't really any economic forces that can explain why the sudden drop we've had in fertility rates since the 2008 recession.
• 29:27
  SPEAKER_01: It's just been changes in attitudes among people.
• 29:30
  SPEAKER_00: Aaron Powell Okay.
• 29:31
  SPEAKER_00: So it's it's not simply that we have a higher standard of living.
• 29:36
  SPEAKER_01: There was a point when we were getting richer that we had more kids, you know, like the baby boom, after the tight epoch of the Great Depression and then, you know, World War II and all that rationing.
• 29:47
  SPEAKER_01: Then we got rich and we had more kids.
• 29:49
  SPEAKER_01: And so the economic factors can actually drive it either way.
• 29:53
  SPEAKER_01: But what these studies show is that all those economic changes that have happened recently, none of them can explain why we're having fewer children.
• 30:00
  SPEAKER_01: Uh it doesn't have anything to do with women's job opportunities or wages or debt levels or any of those things.
• 30:06
  SPEAKER_01: It's just changing priorities.
• 30:09
  SPEAKER_01: That's how they summarize it.
• 30:11
  SPEAKER_01: And so maybe it is more of a turn to the materialistic side.
• 30:15
  SPEAKER_01: Here's the opportunity cost of a child I saw in one book.
• 30:18
  SPEAKER_01: It's that I can't fly first class anymore.
• 30:21
  SPEAKER_01: It's that I can't go out to these nice restaurants anymore.
• 30:23
  SPEAKER_01: Dot dot dot.
• 30:24
  SPEAKER_01: If that's the way you're thinking, these rates are fallen and they're not going to get back up.
• 30:28
  SPEAKER_00: And what about the availability of birth control?
• 30:31
  SPEAKER_00: Is that a big part of it?
• 30:32
  SPEAKER_01: Aaron Powell That obviously had an impact, you know, when it came on, but that's not something that's changed recently that can explain why these rates have fallen so low.
• 30:41
  SPEAKER_00: Aaron Powell And probably diminished religious commitments.
• 30:45
  SPEAKER_00: Definitely.
• 30:46
  SPEAKER_00: Yep.
• 30:46
  SPEAKER_00: Aaron Powell We're up on time, I see, but you mentioned you have a list of 10 concepts you use in the classroom.
• 30:52
  SPEAKER_00: But what are a few of the most important lessons for someone to learn from studying economics?
• 30:57
  SPEAKER_01: I start my semester with, you know, here are the core of economics.
• 31:03
  SPEAKER_01: There's scarcity.
• 31:04
  SPEAKER_01: We want more than we can get.
• 31:06
  SPEAKER_01: Okay, you know what that means?
• 31:07
  SPEAKER_01: We got to make some choices.
• 31:09
  SPEAKER_01: There are trade-offs.
• 31:10
  SPEAKER_01: There's no such thing as a free lunch.
• 31:12
  SPEAKER_01: There's one of the most important lessons you can apply everywhere.
• 31:16
  SPEAKER_01: But while scarcity exists, I like to emphasize that we live in a world of both scarcity and abundance.
• 31:22
  SPEAKER_01: And we have a lot of stuff, but we can't have as much as we want, even though we keep getting more and more.
• 31:29
  SPEAKER_01: We're likely to become even more abundant in the future because we give incentives to entrepreneurs and inventors to come up with all these great things.
• 31:36
  SPEAKER_01: You can become the next, I would say billionaire, but trillionaire these days by coming up with whatever the greatest thing is.
• 31:43
  SPEAKER_01: But even as that happens, we're still faced with scarcity.
• 31:47
  SPEAKER_01: And so what I like to emphasize is that with all this abundance, you have so much choice.
• 31:52
  SPEAKER_01: You shouldn't get tricked into choosing things that aren't worthwhile, that are beneath you, right?
• 31:59
  SPEAKER_01: What you really want is something that's going to satisfy you as a human being and not just as a like consumer out there.
• 32:07
  SPEAKER_01: So count your blessings is one of the main lessons that I like to emphasize.
• 32:12
  SPEAKER_01: And not just your costs and benefits, but count your blessings on top of all that.
• 32:17
  SPEAKER_00: Thank you so much for joining me today, Robert.
• 32:19
  SPEAKER_00: It was been uh enjoyable.
• 32:21
  SPEAKER_00: I could talk for another hour or more on economics and the great work you do.
• 32:26
  SPEAKER_00: We appreciate so much important work you do at Wake Forest with the students there and also in our high school programs for teachers and students.
• 32:34
  SPEAKER_00: Their success is tied so much to having great instructors like you that can be in the classroom and be both a mentor and an instructor who inspires them to be good teachers of economics.
• 32:43
  SPEAKER_00: So thank you so much.
• 32:45
  SPEAKER_01: Well, it was my privilege to be on.
• 32:46
  SPEAKER_01: Thank you.
• 32:48
  SPEAKER_00: Thank you for listening to the Liberty and Leadership Podcast.
• 32:51
  SPEAKER_00: If you have a comment or question, please drop us an email at podcast at tfas.org.
• 32:58
  SPEAKER_00: And be sure to subscribe to the show on your favorite podcast app and leave a five star review.
• 33:05
  SPEAKER_00: Liberty and Leadership is produced at Podville Media.
• 33:08
  SPEAKER_00: I'm your host, Roger Reim, and until next time, show courage in things large and small.