Video of Richard Epstein speaking at high speed without notes at the Hayek Seminar at George Mason University.
Professor Epstein will draw on his most recent book, The Classical Liberal Constitution: The Uncertain Quest for Limited Government (Harvard, 2014), in which he employs close textual reading, historical analysis, and political and economic theory to urge a return to the classical liberal theory of governance that animated the framers’ original text, and to the limited government this theory supports.
Alexander Tarrabok of George Mason University and Marginal Revolution wrote a paper on Innovation in Australia. This has been around for a couple of years, has it generated helpful discussion? Now we are back into government-driven innovation mode, what does this paper say to that line of thought?
Better ideas drive economic growth. In the short run, rapid influxes of labor or capital can accelerate growth but in the long run, the only road to riches is creating more output from the same inputs and for that we need better ideas. Where will better ideas come from? It’s tempting to answer from scientists, engineers and investments in research and development. This answer is true enough for the world as a whole and this answer encourages us to think about education, investment and legal policies that could help to generate more and better ideas. I will return to some of these policies later on; but for a country such as Australia, 22.6 million people in a world of 7 million, there is a simpler answer to the question of where better ideas will come from. Better ideas will come from other countries.
Tarrabok on the widening gap between the more and less productive firms.
Private, non-financial service sector firms on the productivity frontier saw productivity growth of 5%, eclipsing the 0.3% average growth rate. Perhaps more importantly, the gap between the globally most productive firms and the rest has been increasing over time, especially in the services sector. Some firms clearly “get it” and others don’t, and the divide between the two groups is growing over time.
Robert Higgs on ideological ships that pass in the night.
Mainstream academic economists fall disproportionately into two opposing groups. In one of these groups, the members see free markets as tending to fail relative to formal theoretical conditions for optimality. In the other group, the members see free markets as tending to work better than any alternative institutional arrangement, including an arrangement produced by pervasive government attempts to remedy perceived ‘market failures.’ Members of these two groups tend to favor different methodological precepts and research strategies. They also tend to embrace different ideologies and correspondingly different personal and professional identities. Economists who see nearly every real-world market as ‘failing’ naturally tend to favor welfare-state measures to ‘correct’ the distributions of income and wealth that such defective markets generate as a by-product of their operation.
Arnold Kling on formal models and market failure.
There is not going to be a global coffee shortage. A bit of price theory.