Daniel J. Smith

The Chicago Price Theory initiative has a Master Class and it is highly recommended. But I would like to have a discussion with my good friends @BryanPCutsinger @BrianCAlbrecht etc. about a carefully listening to Kevin Murphy's wonder introduction. See min 1:45-2:15, where he discusses the problem of cutting the story too short. This of course was a point McCloskey hammered home in her Applied Theory of Price and elsewhere -- DO NOT CUT THE STORY SHORT -- keep pressing the logic of the economics forces _at work_. But then also listen carefully to the discussion shortly after on the importance of competition. As Murphy puts it, competition ensures that if there are gains from trade to be had people will, as he puts it, "try to get them." In both instances, the power of price theory is in guiding exchange and production behavior to pursue productive specialization and realize the gains from peaceful social cooperation. Optimality conditions are by-products of a process of adaptation and adjustment, not assumptions. We are constantly groping toward equilibrium, not trapped in it at each instant in time. Our models, as such, may imperfectly capture what it is that we want to explain -- exchange and the institutions within which those exchanges take place. As a result we can either question the model, or ignore the process. But if we ignore the process we lose the power of price theory in our depiction. As both Alchian and Buchanan stressed the market is best understood and in a constant state of becoming and exhibiting the pattern of an evolution toward a solution. And not just characterized by the solution concept itself. youtu.be/X9LC6I12zPg?si…

@SOMAMadman @HistoryBoomer You’re thinking of a static Laffer curve, not a dynamic Laffer curve. The dynamic effects are more important.

Strangely, the next marginal billion dollars isn't the incentive you think it is for someone with, say, 30 billion dollars to keep innovating and providing. By any sensible measure, they're as incentivized as they're gonna get. They can't possibly decide whether to keep working or retire on the basis of additional billions. They and their descendents will have all the money they could ever possibly need.

The US has 989 billionaires with a net worth of at least 5.7 trillion dollars hording our resources. If we distributed that $$$ equitably, regular Americans could leave their jobs and explore lives of creativity and self-growth, with food, clothing, and shelter provided for free.

Who was opposed to public drinking fountains? Soda fountains who saw it as a threat to their business. newspapers.com/article/parago… via @_newspapers

So.... Why is Vance there giving a stump speech as a foreigner to influence the election outcome?

I’m pretty sure that wiping out “a whole civilization” will involve issuing unlawful orders. Remove this man from office before he actually attempts to carry out what he’s threatening. We don’t know what he’ll do, but given the unhinged rhetoric, we shouldn’t wait to find out.

@LarsonKellie @RecoEco @haugejostein Absolutely! I have a recent paper empirically testing Hayek’s hypothesis in The Road to Serfdom, and it confirms it: papers.ssrn.com/sol3/papers.cf…

@RecoEco @Smithdanj @haugejostein Try The Road to Serfdom by Hayek. My grandparents left pre WW2 due to the socialist European lunacy. It never, NEVER-will work.

By the way, if you look at the top companies in the world, they are companies that serve ordinary people. In many cases, their mission is serving and providing jobs for the poorest parts of society. Collectively, the votes of ordinary people in the market, outweigh any market concentration of wealth. Compare that to democracy, where those with wealth had quick and constant access to those in political power.

@Smithdanj @haugejostein In a democracy, one person, one vote.

The idea that capitalism = freedom is a myth. Capitalism restricts freedom in countless ways. Under highly capitalist systems, basic needs are commodified. Freedom becomes paywalled. Rich people have freedom, poor people don't.

Nobody is disputing the ethics of democratic decision-making. The issue is the scope to which that democracy is extended. When it is extended to market decision-making, it creates conflicts and perverse incentives. If we socialized hamburger manufacturing, it would take a decision made privately, where every individual votes for the hamburger they want without generating conflict with anyone else, and where manufacturers have the incentive to innovate with their product to improve it and keep costs down, to a situation where we collectively would have to decide what type of hamburger should be made. Suddenly, it would become a huge social conflict because people have different preferences (in addition, we would eliminate the incentive for innovation and cost-cutting, reducing future gains and burdening citizens). Under capitalism, you vote for the hamburger you want, and you win. I vote for the hamburger I want, and I win. Under socialism, only one side wins, and the losing minority lives under the tyranny of the majority.

Vastly overexaggerated the power of advertising. Not only do we have powerful examples of well-financed marketing failing (new coke, Crystal Pepsi, Stadia, Amazon Fire phone, etc.) but the share of GDP that goes to advertising is a measly 2 percent. If advertising had the power Galbraith assumed, it would be much higher. Also, doesn't appreciate the economic role of advertising: fee.org/articles/adver… Also, the argument ignores the role of the U.S. government, and Keynesianism, in driving consumption. Trentmann's Empire of Things provides a good explanation of how government policies (home ownership subsidies, free roads, parking, and rural mail delivery, and subsidized electricity) encouraged people to buy much bigger houses and fill it with appliances and things. Do democracies neglect public infrastructure? Absolutely. There is a short-termism inherent to democracies, where politicians are focused on winning the next election.

@Smithdanj @haugejostein Have you read The Affluent Society? I think it's a good antidote to Mises.

@LaCamellaFeliz @haugejostein Here are the relevant pages from Mises:

Mises (1922) addresses this point. How does one acquire a million ballots under capitalism? By directing scarce resources to the production of goods and services that people voluntarily pay for. It is the result of previous elections. The only way they can maintain these "ballots" by continuing to direct resources to the preferences of consumers. Any new innovation quickly breeds competition, making the luxuries of today, the necessities of tomorrow, which is why innovators receive only a tiny fraction of the gains they generate for society (nber.org/digest/oct04/w…). Now, imagine what it would do to productivity we redistributed resources equally. People would immediately vote for goods and services and we would have the same distribution again. But, if you continue to redistribute, the people with a comparative advantage in putting resources to their highest value use as dictated by consumers, would quit producing.

@haugejostein papers.ssrn.com/sol3/papers.cf…

@haugejostein Mises (1922):

Where's all that Really Real Realist Restraint that certain persons assured us about?

History has more than enough inventors, businessmen, scientists, intellectuals, and philanthropists with zero blood on their hands to name every building, school, park, and theater in the world. There's no need to name *anything* after politicians of any stripe - as if they don't already receive far more honor than they deserve while they're alive.

@Heccles94 Nope. nber.org/digest/oct04/w… sciencedirect.com/science/articl…

You’ve literally just described capitalism

The President(s) Fought the Law and the Law Won - marginalrevolution.com/marginalrevolu…

I'm speaking at Public Choice Outreach 2026! Travel stipends are available. publicchoice.gmu.edu/center-program…