Over the past few months students have been working on their entries for the Supply and Demand Music Video Contest. The entries are all in and some of them are quite creative. The three most viewed entries in the contest already have 20,000 views. I never thought I would see a rap video featuring Anarchy and the Law! Hah!

We have narrowed down the entries to 15 finalists. Here is a sample:

Which one is your personal favorite?

Check out the 15 finalists here http://hackleychair.blogspot.com/ and vote on Facebook.

Edward Peter Stringham

Hackley Endowed Professor for the Study of Capitalism and Free Enterprise, Fayetteville State University

The Hackley Endowment for the Study of Capitalism and Free Enterprise at Fayetteville State University is sponsoring a contest for students to create music videos about supply and demand.

The entries are starting to come in. Here is one from my students:

Funny? Incredible? You be the judge. If think you or someone you know can do better, enter the contest! The winning entry gets $2,500 and others win cash prizes too. Professors tell your students. If your students win you get $500.

I thought of this idea because when I was in college my professor, Walter Block, said that one of the problems is that critics of markets have so many catchy folk songs, but economists don’t have any songs about supply and demand. As Mises said economic ideas rule the world. Now is our chance!

Find out more about the contest here.

Edward Stringham, Hackley Endowed Professor for the Study of Capitalism and Free Enterprise, Fayetteville State University

The most recent Economist has this figure representing homicide rates around the world.

The fact that certain nations have such high homicide rates is very unfortunate. Are these rates correlated with anything? The Economist suggests that lower levels of economic performance are correlated with higher homicide rates. This is partially true, but it does not tell the whole story. Basic regressions looking at income and homicide are missing an important variable, namely the effect of government.

My coauthor John Levendis and I investigated the data for 63 countries and consistently found that higher homicide rates are correlated with more government (as measured by lower levels of economic freedom). Maybe people should start questioning the assumption that government is created to reduce crime.

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Edward Stringham, Hackley Endowed Professor for the Study of Capitalism and Free Enterprise, Fayetteville State University

Most people argue that government enforcement of contracts is required otherwise a market cannot operate. For example, Douglass North argues that “complex contracting…in a world of impersonal exchange must be accompanied by some kind of third-party enforcement.” The growing list of financial regulations are often supported by people hold such a view.

But if you look back in history markets emerged without government support. In 17th century Amsterdam government officials refused to enforce all but the most simple financial contracts. Nevertheless traders developed sophisticated contracts including forward contracts, short sales, and stock options even though these contracts were officially against the law. The history of the world’s first stock markets is totally at odds with the predictions of academics who have a government centric view of markets and believe that markets only emerge after government creates the framework.

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Edward Stringham, Hackley Endowed Professor for the Study of Capitalism and Free Enterprise, Fayetteville State University

I was pleased to be able to present this paper at the most recent Mises Circle in Las Vegas where I got to see some great people.

The realm of law is usually the foundation of government, and the suggestion that central control be abandoned shocks most people as something impossible. Philosophers, from Hobbes to Rand, believe that for all encounters there must exist one authority to create and enforce laws. They are baffled by what would happen if two parties had a conflict without an overarching judicial system. They assume that only the public sector can prevent and resolve disputes, but they have failed to notice the many private arrangements already in existence to deal with such dilemmas.

In the current world numerous non-government institutions protect individuals on both local and global levels. Examining these arrangements can give insight on how private law enforcement can function, thereby eliminating any need to speculate on how future firms might operate. The market allows consumers to choose different types and degrees of services and this could extended in the realm of law. Choice does not mean chaos and does not mean that people will be forced to deal with laws that they have not chosen. Most legal problems probably can be attributed to public law enforcement, so we do not need to assume that private law would be perplexed with the same dilemmas. A private legal system could allow individuals to agree ahead of time to follow certain rules. Judges would not need to compare individuals’ utilities; they would solely make judgments in accordance with consumers’ agreed-upon wants.

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Edward Stringham, Hackley Endowed Professor for the Study of Capitalism and Free Enterprise, Fayetteville State University

Do people from other countries hate us because of our freedom or because of our military? Many people believe that military and markets go hand in hand. Indeed, many conservative advocates of markets also passionately support the military, and many people who oppose militarism abroad also oppose markets. Nineteenth-century writer Richard Cobden, however, maintained that the military and markets were substitutes: more military entails less market. Although the ideas in The Political Writings of Richard Cobden (1903) are a century and a half old, Cobden considered many arguments for military intervention still made today. He discussed whether military spending was beneficial to the economy, to commerce, and to peace, and in all three cases he answered no. Both conservatives and left liberals can learn much from Cobden’s discussion of commerce, markets, and peace. To Cobden, the advocate of peace should be an advocate of markets.

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Edward Stringham, Hackley Endowed Professor for the Study of Capitalism and Free Enterprise, Fayetteville State University 

In the Spring 2011 issue of the Journal of Economic Behavior and Organization, Todd Zywicki and I ask: Should law be provided centrally by the state or by some other means? Even relatively staunch advocates of competition such as Friedrich Hayek believe that the state must provide law centrally. This article asks whether Hayek’s theories about competition and the use of knowledge in society should lead one to support centrally provided law enforcement or competition in law. In writing about economics, Hayek famously described the competitive process of the market as a “discovery process.” In writing about law, Hayek coincidentally referred to the role of the judge under the common law as “discovering” the law in the expectations and conventions of people in a given society. We argue that this consistent usage was more than a mere semantic coincidence — that the two concepts of discovery are remarkably similar in Hayek’s thought and that his idea of economic discovery influenced his later ideas about legal discovery.

Anarchy and the Law: The Political Economy of Choice

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Edward Peter Stringham, Ph.D., is the Hackley Endowed Chair for the Study of Capitalism and Free Enterprise at Fayetteville State University

I hope everyone has seen the phenomenal video on Keynes versus Hayek. It has been released just a few hours and it is now YouTube’s News and Politics #1 Top Favorited Video for the day.

As Mises and Rothbard argued social change requires spreading ideas to the masses.  John Papola, Russ Roberts, Lisa Versaci, and Josh Meyers and the rest at EconStories are brilliant for getting the ideas of Austrian economists to so many people in such a manner.

P.S. I am not a Keynesian, but I play one on TV.

Edward Peter Stringham

Hackley Distinguished Professor for the Study of Capitalism and Free Enterprise at Fayetteville State University

What does it take to bring about a well-functioning market? Almost all economists agree that people should engage in cooperative exchange rather than predation, theft, or fraud, but how to ensure this is a matter of debate. Many neoclassical economists follow Thomas Hobbes and focus on changing legal arrangements to solve prisoners’ dilemma situations (Barzel, 2002, Hirshleifer, 2001; Tullock, 1972). Eliminating unwanted behavior is a matter of imposing optimal fines, the “price of an offense” (Becker, 1968, p.262), to alter the costs and benefits of different choices. Buchanan (2003, p.183) argues there must be “an agency that will in some fashion, offer incentives, positive and negative, that will lead participants to respect behavioral constraints.” This approach assumes that people are knaves and then seeks to designs political and legal institutions that will elicit cooperation even amongst amoral egoists (Brennan and Buchanan, 1985). Notably absent from these scholars’ discussions are appeals to morality. As Oliver Wendell Holmes (1897, p.459) wrote, “A man who cares nothing for an ethical rule which is believed and practised by his neighbors is likely nevertheless to care a good deal to avoid being made to pay money and will want to keep out of jail if he can.” According to this view, one must assume that people are bad and use the threat of force to make them behave positively.

Yet, economists such as Wilhelm Röpke and Adam Smith and philosophers such as Immanuel Kant heavily emphasize the importance of another type of constraint: the internal moral constraint. These are the rules that people choose to follow independent of what the law says; they are chosen from within. Manners, politeness, honesty, and trustworthiness are the most obvious examples of internal constraints that people adopt independent of external rules. But in areas with external constraints (such as laws against force or fraud), are external constraints the only factor influencing behavior, or do internal moral constraints have an influence too?

Most neoclassical economists are reluctant to discuss or appeal to moral constraints since they run contrary to many of the basic assumptions of homo economicus, rational self-interested man. Others may recognize the potential importance of morals, but do not talk about them because they cannot be measured using their scientific method nor can they be easily manipulated using policy. Since many neoclassical economists ignore morality they usually attribute the cooperation they observe to external constraints. But the relative influence of external versus internal constraints is an empirical question. Many or almost all of the observed differences in cooperation might be attributable to differences in people’s internal constraints. Furthermore, whether changes in external constraints or appeals to internal constraints are more effective in influencing behavior is also an empirical question. People who focus solely on external constraints are more likely to believe that changes in laws and regulations (as opposed to changes in morality) are the only way to eliminate opportunistic behavior.

In recent years various behavioral and experimental studies indicate that what I am referring to as internal constraints are not only important, but one of the most powerful methods of inducing cooperation. Not everyone behaves morally, but many people do, even in the absence of external constraints. For example, Ariely (2008) finds that starting experiments by asking subjects to think about the Ten Commandments subsequently makes them more likely to tell the truth, a finding obviously inconsistent with the assumptions of homo economicus. Although some people clearly behave much less morally than others, this paper will offer reasons why economists should embrace the study internal moral constraints, which is latent or explicit in much of the relatively recent research in behavioral and experimental economics. Internal moral constraints may be given to humans by our creator, they might have come about through evolution, or they might be learned through the process of socialization, education, or religion.

Additional research in this area can provide economists with a better idea of when and why people cooperate, for example, and perhaps suggest ways to utilize internal constraints. For instance, in the short run, if people can associate with others who share similar sets of moral beliefs (and can avoid associating with people who do not) the total amount of cooperation can increase. In the long run, although neoclassical economists often focus on changing external constraints, working to influence internal moral constraints might be a better means of eliciting cooperation. A society in which nobody is honest or respects the property rights of others is unlikely to become a successful market economy no matter how many laws exist.

Even though the homo economicus assumption is being overturned by a plethora of research, the normative prescriptions advocated by many economists have not caught up. This article argues that the orthodox neoclassical holdouts should not only embrace studying internal moral constraints, but that many of their normative prescriptions should be reconsidered. Instead of hoping that an external group can “force people to cooperate” (Holcombe, 1987, p.108), a better approach may be to try to bring about changes in internal constraints. Rather than attempting to devise an optimal vector of punishments, advocates of a market economy might better advance their cause by openly studying the moral prerequisites of a market economy.

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Edward Peter Stringham, Ph.D., is the Hackley Endowed Chair for Capitalism and Free Enterprise Studies at Fayetteville State University

We have all heard that alcohol in moderation appears to offer health benefits , from reducing the risk of heart attack to even decreasing susceptibility to the common cold. And for the many people who consume alcohol, drinking sometimes has entertainment value, as well.

But I live in North Carolina, where we have some of the highest beer taxes in the nation and I still cannot buy spirits from private stores. Nationally, we hear from groups such as the American Medical Association that alcohol has many downsides, such as it gets in the way of peoples’ careers. Even Donald Trump says, “I’d like to see the lawyers start going after the alcohol companies, ’cause I think alcohol is a much greater detriment than cigarettes.”

But there’s good news for those who like drinking and want good careers: economic data shows that drinkers actually earn significantly more money than non-drinkers.

In an article in the Journal of Labor Research, co-author Bethany Peters and I looked at data on 7,500 people. We held numerous variables, such as education and age, constant in order to isolate the effects of drinking. Roughly 75 percent of adults are drinkers and 25 percent are abstainers. Holding other variables equal, we found that someone who drinks earns 10 percent more on average than someone who does not. We also found that men who reported going to a bar at least once in the last month earn an additional 7 percent. That’s 17 percent more money than people who don’t go out or drink.

Why do drinkers earn more? We believe it’s because drinkers have bigger social networks and that enables them to make more money. If drinkers know more people, they will be more likely to find a better job. In addition, drinkers also may be more likely to get along well with coworkers and clients than the person who likes to stay at home and play video games. That can explain why drinkers who drink in bars tend to earn the most.

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Edward Peter Stringham, Ph.D., is the Hackley Endowed Chair for Capitalism and Free Enterprise Studies at Fayetteville State University.

Jeff Riggenbach has a good audio review of Yale anthropologist James C. Scott’s recent book The Art of Not Being Governed. Riggenbach states, “This book seems to have attracted no attention at all from libertarians. Yet this is a book libertarians with an enthusiasm for history will find very very interesting indeed.”
Riggenbach is right that this book is well worth reading. And the book is being highlighted in a forthcoming symposium edited by Chris Coyne in the Review of Austrian Economics. Contributors include Benjamin Powell and Malavika Nair. In “Repelling states: Evidence from upland Southeast Asia,” Caleb Miles and I discuss some of the lessons that can be learned from Scott’s anarchist history of Asia. We focus on how the people in upland Southeast Asia successfully repelled states. This history provides an answer to libertarian pessimists who wonder whether the state can ever be avoided. Here is the abstract:

Although many economists recognize the existence of stateless orders, economists such as Cowen, Sutter, and Holcombe question how viable stateless orders are in the long run. Research documenting the historical existence of stateless societies is much more developed than our understanding of whether societies can successfully remain free of states. This article analyzes historical and anthropological evidence from societies in Southeast Asia that have avoided states for thousands of years. The article provides an overview of some of their customary legal practices and then describes the mechanisms that they use to avoid, repel, and prevent would-be states. Such stateless societies have successfully repelled states using location, specific production methods, and cultural resistance to states. A better understanding of these mechanisms provides a potential explanation for how such societies remained free of states for long periods of time.

How did people successfully live free of government for millennia? Find out here.

Edward Stringham, Hackley Endowed Chair for Capitalism and Free Enterprise Studies, Fayetteville State University

Since Walter Block (my most excellent college professor) and coauthors James Gwartney and Robert Lawson put together the Economic Freedom of the World Report fifteen years ago, economists continue to find that economic freedom is associated with many good things. But do these positives come at the expense of bad outcomes such as violence and crime? Sociologists Wenger and Bonomo write that “The relationship between crime and the terminal crisis of capitalism has become the subject of considerable debate….[But] the debate does not concern the role of capitalism in producing crime—to all but the reactionary or the naïve, such questions have long been settled.”

Noam Chomsky also wrote that, “there are consistent libertarians, people like Murray Rothbard– and if you just read the world that they describe, it’s a world so full of hate that no human being would want to live in it.” This runs contrary to economists such as Frederic Bastiat or Murray Rothbard himself who argue that the market creates a harmony of interests.

Who is right? In recently published The 2010 Economic Freedom of the World Annual report, John Levendis and I have a chapter that looks at international data and that finds countries with more economic freedom actually have significantly lower rates of homicide. Touché Chomsky!

Not only do classical liberals have well-thought-out theories of why markets increase peaceful interaction, but their theories are consistent with the facts. If the relationship holds, one of the best ways to decrease crime is to move towards laissez-faire. Read all about it in our article: “The Relationship Between Economic Freedom and Homicide.”

Edward Stringham, Hackley Endowed Chair for Capitalism and Free Enterprise Studies, Fayetteville State University

Ludwig von Mises argued that the world inclines to socialism because people support socialism. To Mises a free market depends on enough people supporting a free market. I was thrilled when Bryan Caplan and I won $25,000 for ISI’s Templeton Culture of Enterprise Best Article Award for our article defending Mises’s views on the importance of public opinion.

But can free-market ideas appeal to the masses? My professor Walter Block has long opined that socialist ideas are easier to sell with short slogans and songs: “It’s not sexy to write a song describing supply and demand.” I am pleased to report that two excellent Fayetteville State University students of mine made this catchy music video, “Free market anthem.” A line about supply and demand equilibrating (check), a dancing alien (check). It’s just a matter of time before socialism crumbles!

Edward Stringham, Fayetteville State University

The TSA’s threats against travelers are making the headlines and attracting a lot of well deserved ire. Art Carden’s Forbes piece “Full frontal nudity doesn’t make us safer: Abolish the TSA” has been downloaded more than 200,000 times in just three days. Another fact is coming out: the former Secretary of Homeland Security stands to gain by having travelers threatened to use the machines, which are made by his company. Who knew that law enforcement would be used to help make money for those associated with government?

Governments actually have a long history of using law enforcement for personal gain. A thousand years ago in England, law enforcement was largely private. Individuals would take their disputes to the equivalent of arbitrators and victims would be compensated by wrongdoers. But after the Norman invasion, kings realized that they could raise money through the legal system by declaring more and more things violations of the King’s Peace. They mandated that a portion of the restitution go to the king and it was not long until they required all “restitution” go to the king. Unsurprisingly this removed incentives for people to resolve disputes through the formerly private system.

Bruce Benson and Murray Rothbard had it right all along. Government law enforcement was not created to satisfy a public good. It was created to coerce money from the public for the benefit of the rulers. Shall we let it continue? The full history is described by me and Nicholas Curott in our new article “The Rise of Government Law Enforcement in England” published in The Pursuit of Justice edited by Edward Lopez.

The Association for Private Enterprise Education and the Market-Based Management Institute are proud to announce that ABC’s John Stossel will be on the panel of judges for this year’s Economic Communicators Contest. The panel will judge the contest’s three finalists at APEE’s Annual Conference to be held at Harrah’s Las Vegas Hotel & Casino April 6-8, 2008. The contest deadline is February 22, so there’s still time to enter for your chance to be evaluated by John Stossel and win cash prizes.

Mr. Stossel will also be receiving APEE’s Thomas Jefferson Award, given to honor an individual whose public service has embodied the Jeffersonian ideal. It is bestowed on those who have dedicated their careers to establishing and maintaining the ideal government. It highlights the efforts of an individual who has demonstrated a desire to truly put the public interest first by providing, life, liberty, and the pursuit of happiness, for all. You can still register to attend the conference and see John Stossel speak.

And you can read Steve Levitt’s interesting commentary about the contest here.

From here

With a generous grant from the Market-Based Management Institute, the Association of Private Enterprise Education announces the:

Economic Communicators Contest

First Prize: $10,000
Second Prize: $5,000
Third Prize: $2,500The rules are simple: If you believe you are effective at communicating economic concepts we’re looking for you! Contestants must submit:

A video clip of your teaching or speaking that is at least 5 minutes but no more than 20 minutes. You can submit a recording of a public lecture or simply a recording you make at home. The topic should be either an original idea incorporating economic concepts, or a great explanation of an existing idea in economics. The clip can be an excerpt of a longer talk.

An accompanying written work (published or unpublished) of 5,000 words or less. This can be an essay, chapter excerpt, or even PowerPoint slides. Anything that conveys your ability to persuasively communicate in written form.

This contest is open to anyone (e.g., assistant professors, graduate students, high school teachers) who do not have tenure at a college or university. Submissions will be considered by a panel of judges from APEE and the MBM Institute. The top three finalsists will be invited to each make a 15 minute presentation during a plenary session at the 2007 APEE annual meeting, scheduled for April 8-10 in Cancun, Mexico, where they will be judged by a distinguished panel of communicators. Airfare and hotel accommodations will be provided, and finalists must be in attendance and agree to have their performances broadcast to win the cash prizes.

Additional details:

All entries must be received by February 2, 2007.

Written materials and presentations must be in English.
Judges will assign a weight of 25% to the written portion and 75% to the video portion.
Video clips may be sent in on VHS, CD, DVD, or uploaded to a website such as YouTube.com. If sending video tapes or disks, please send three copies of each, which will become the property of APEE. Please do not send videos as e-mail attachments. Computer clips on CDs must be viewable with Windows Media Player or Apple Quicktime and DVDs must be viewable on most DVD players. If contestants upload their clip to a website, please note the precise internet link in the contest entry.

Officers and employees of APEE and the MBM Institute are ineligible.

Questions? Contact Ed Stringham, APEE President (edward.stringham@sjsu.edu) or Tony Woodlief, MBM Institute President ( tony.woodlief@mbminstitute.org). Entries can be either e-mailed to one of the above addresses (if video is on the web) or mailed to: Market-Based Management Institute, P.O. Box 8250, Wichita, KS 67208.

PS All are welcome to attend our annual meetings which usually have around 330 attendees and this year will be held in Cancun April 8-10. More details can be viewed here: www.apee.org

Is social interaction without the state as bad as Hobbes and the public choice economists believe. Much of the recent analysis suggests otherwise. But maybe it is true that humans are inherently prone to conflict. Perhaps the Hobbesian dilemma is a real threat. Whatever the case may be, government does not seem to offer a solution. Either Leviathan is part of the problem or Leviathan is superfluous. Under either scenario, anarchy might be the best choice after all. FULL ARTICLE

Chris Westley recently asked a discussion group about “mainstream monetary economists who expressed doubts about conventional monetary tools over the last few years.”

I recently saw Kris Mitchener of Santa Clara University present a paper “The Great Depression as a Credit Boom Gone Wrong,” which he coauthored with the eminent Berkeley economist Barry Eichengreen. They cite Hayek, Mises, Robbins and Rothbard and use data from a dozen countries to analyze the hypothesis that the Great Depression was a credit induced boom. They construct a rough measure of credit expansion and find that countries that had a greater expansion of credit in the twenties suffered a greater collapse in the thirties. (Mark Thornton cites the work in his paper on skyscrapers.)

(They examined this line of work because some people at the Bank for International Settlements appear to have been discussing the Austrian view.)

They relate the problem to those experienced within the past few years. I am not sure where Eichengreen stands on normative macroeconomics but after the presentation Mitchener still supported having active monetary policy. He said that even though Greenspan may not know where the economy is in the business cycle, Greenspan still should have the ability to get the economy out of a recession after the fact. As a footnote they also favor increased regulation of the financial sector to prevent credit expansion.