Part one of a
two-part series.
Think
of life as a series of equations. Everything you do is a trade-off. Every
decision has a plus or minus attached.
You’ve
never considered economics a part of your life? Steven Landsburg wants to
change that. In popular books and newspaper and magazine columns, Landsburg
vividly illustrates the impact of his field on everyday life.
When
Landsburg discusses economics, he sounds more like a philosopher or
psychologist. And you’ll come away convinced that economics underlie everything
from food to sex.
Landsburg,
a professor at the University of Rochester, is a prolific author whose 1993
book, The Armchair Economist,
continues to sell 500 copies a month. Microeconomics,
a textbook he wrote 15 years ago, remains among the most popular texts in the
field. “Everyday Economics,” the column he’s been writing for the last decade
for the online magazine Slate, continues to draw hundreds, even thousands of responses per column from
readers.
His
Slate column had an unlikely
beginning. Landsburg sent a manuscript of The
Armchair Economist to one of his favorite writers, well-known pundit and
former CNN Crossfire host Michael
Kinsley, asking him for a blurb.
“I
got back a disdainful letter saying he’d read the manuscript and it illustrated
everything he thought was wrong with economists and the way economists think.
And he certainly would not write a blurb,” Landsburg says. “Seven years later,
out of the blue, I got a call from Kinsley and he said, ‘I’m starting a
magazine and ever since you sent me that manuscript, I’ve had a note on my desk
saying I’d have to find an occasion to get you to write for me.'” (To find a
backlog of Landsburg’s Slate columns,
type his name into the search box at slate.com.)
While
Slate readers tend to be polite in their responses, a recent appearance on Fox
News with John Gibson drew frightening, racist e-mail.
It
began when, in a Forbes column,
Landsburg argued that protectionism is ugly in many of the same ways that
racism is ugly because “it involves saying that we care less about some people,
in one case because they are a different race and in the other case because
they’re in a different country. And we should care more about unemployment in
America than elsewhere.”
Gibson
never got past berating him.
“I
didn’t go into this believing that protectionists were racist, but the email I
got after this was so rabidly racist and so frightening.”
A
Libertarian who tends to vote Republican, Landsburg throws out ideas guaranteed
to delight and enrage people of every political stripe. Conservatives might
love his position on minimum wage (abolish it!), but they may need extra heart
medication when digesting his explanation of why the less promiscuous among us
should be out having more sex.
However
controversial his opinions, Landsburg has style. He moves effortlessly through
complicated economic issues by tying them to real-life situations. The fanciful
Gil Hibben knives displayed in his Brighton home were purchased on eBay; his
strategy for winning eBay auctions was the subject of a Slate column. Other columns (and his books) are sprinkled with
references to Wegmans, Tops, and Barnes & Noble. And his book Fair Play was structured around economic
ideas he learned bringing up his daughter.
Landsburg’s
stature as a popular economist is so strong that he was selected to review Freakonomics in the Wall Street Journal. His rave may have helped it rise to the top of
best-seller lists. (He observed immediate results by watching it climb in
Amazon standings after his review was published.)
In
a recent interview, edited for publication, we asked Landsburg to discuss his
views on outsourcing, slavery reparations, fair housing, and whether having
more sex would be safer for all of us.
City: Your books and columns make it clear that you are an
advocate of free trade, so I assume you were enthusiastic about CAFTA (The
Central American Free Trade Agreement). Is it wrong-headed to care about
American jobs going south of the border?
Landsburg: I think it’s
wrong-headed for many different reasons independent of each other. Even if all
you care about is Americans it’s wrong because Americans benefit and so do
foreigners. Everyone benefits.
I
don’t think there are any losers from free trade. I defy anyone to point to the
person who would be better off if he never traded with anyone and had to make
all his own clothes, grow all his own food. We all benefit from trade.
I
don’t see any reason why I should care more about total strangers in Detroit
than total strangers in Costa Rica. That seems fundamentally ugly and I’m
appalled that there are so many people who think that.
City: Do you feel the same way about high-tech jobs going to
India and eventually China?
Landsburg: On all the
grounds I just spoke about. It is definitely better for Americans to buy
high-tech services cheap than it is for them to buy them expensively. Finding
someone to outsource stuff to is just like finding a new technology.
If
you can find some guy in China who will analyze your X-rays for 25 percent off
the American radiologist’s rate it’s just like finding a new technology that
does radiology cheaper.
Finding
new technologies is the source of our prosperity, and trade is just another
technology. A partner who will trade for cars is just as good as having a
machine where you put wheat into one side and cars come out the other.
City: In “Fair Play” you say compensating American workers for
jobs lost to free trade is like compensating slave owners for freed slaves.
What’s your logic?
Landsburg: Americans who
benefit from trade restrictions are profiting by restricting the freedom of
their fellow citizens to buy goods from whomever they want to buy them from.
Restricting my freedom to buy goods from China is analogous in some ways to
enslaving me. It’s not slavery, but it takes away some of my freedom and
someone else profits from it.
City: Later in the same book you come out pretty clearly against
reparations for African Americans. You say most of the people who would be
paying the price are not related to people who benefited from slavery. But what
about institutions that everyone benefits from that were built with proceeds
from slave labor? At Brown University, for instance, some buildings were built
with slave labor.
Landsburg: I am not
philosophically opposed to the idea of reparations. I think it’s difficult
after any length of time to identify who the current winners and losers are and
it’s very difficult to make those reparations in a way that makes sense.
City: You also discuss the “symmetry principle,” saying landlords
ought to be able to discriminate against blacks or gays because blacks and gays
can discriminate against landlords. There may be some logic to this, but
shouldn’t the different weights of positions of power be part of the equation?
Landsburg: I’m not sure
it’s so clear that you should expect those power differences. I’ve been a
landlord and a tenant, and I didn’t feel particularly more powerful in one
situation than the other. In the one case I’m relying on a person to let me
live in a building that he owns, in the other I’m relying on a person to pay me
rent.
City: But surely there are differences. What if a black couple
wants to live in a neighborhood with an excellent school district, but the
landlords there are making a choice not to let them?
Landsburg: Obviously
this is horribly ugly behavior, but it seems to me that if freedom means
anything it means protecting the rights of people who we find appalling.
City: You go pretty far in your embrace of this logic, concluding
that Affirmative Action is unfair to bigots. But what about the historical
record in terms of discrimination and disadvantage? In some cases you seem to
regard the world as if it was constructed yesterday.
Landsburg: If you
compensate people for slavery, you want to put the burden of that as much as
possible on people who have benefited from slavery. People who have benefited
from being bigots or refusing to rent to blacks are not the same people who
benefited from slavery.
When
you enslave somebody you’ve done a real wrong; when you refuse to rent to
somebody you’re doing something ugly, but you never owed them an apartment in
the first place.
City: But if there weren’t laws against this kind of
discrimination do you think minority groups would have made the progress they
have over the last several decades?
Landsburg: I hate to say
this, but I expect they wouldn’t have and that’s a sad thing. When I look at
the civil rights laws of the 1960s I think that they’re very hard to justify
morally and very hard to justify constitutionally. I also think they did a hell
of a lot of good and I’m conflicted about that.
City: So you’re saying it was an unnatural thing that we did in
making these laws, but, then again, wasn’t it an unnatural thing we did in
bringing people over from Africa to work as slaves?
Landsburg: It was an
unnatural thing that somebody did.
City: OK, my family came over from Russia around 1900, but what
about the argument that we have all benefited in some measure from that labor?
Landsburg: I say this at
the risk of being misinterpreted, but I suspect that the main beneficiaries of
American Slavery have been American Blacks, the descendents of slaves who are
living in the United States now instead of living in Africa. If you want to go
back and sort out who the winners and losers are from slavery… If you were a
black in Africa in 1810 and you knew what slavery was going to be like, but you
also knew what it was going to mean for your descendents, I’m not sure what you
would have chosen.
City: What about the millions lost on the Middle Passage?
Landsburg: Of course you
want to count that too. Those people are the ones you’d really want to
compensate, but they’re gone. How are you going to do it?
City: The title of a column — and your next book — is “More
Sex is Safer Sex.” Many people would find that counter intuitive.
Landsburg: People who
are very conservative sexually and have a very small number of partners do the
rest of us a big favor by joining the partner pool because they are relatively
safe.
You
don’t want them ramping it up too much because then they’ll become exactly like
the promiscuous people and just as dangerous. If you could get a few more of
them into the partner pool you could slow down the spread of AIDS and people
would be having more sex. And voluntary sex is presumably a good thing.
City: I’m sure this was controversial. Do you think it’s because
you divorced sex from morality and simply looked at it as a reality?
Landsburg: A little bit
of that, but most of the mail I got was from people who disputed the logic of
it and that mail was fun because you got into some very intelligent
discussions. There was some discussion of the morality, but it seems to me
people like to have sex, so more sex would be a good thing.
City: You’ve written that “no one should be asked to pay for
someone else’s health care.” Economist Robert Frank says that it would be
cheaper to pay for the health care of the uninsured because we pay even more
for it when people resort to visiting emergency rooms for non-emergency care.
Landsburg: I just got an
email from an emergency room doctor at Columbia University Hospital. An
ambulance ride costs between $200 and $600. He says he sees between 20 and 40
patients a day who have feigned an injury to get an ambulance ride to someplace
near the hospital. That’s an incredible waste of resources.
Obviously
there are gigantic problems in the way we allocate health care resources and to
try to fix one part of it without fixing other parts surely would make things
worse. I was making a broad philosophical statement there and wasn’t trying to
design a whole health care system.
City: A couple of times in the book you bring up the idea of $7
gallon bottles of water as an example of market forces. A few years ago I
believe it was the Coca-Cola company that came up with the idea of a beverage
machine that would raise the price according to how hot it was…
Landsburg: Yeah, what a
great idea that was and what a shame it failed. I think they marketed it wrong.
Instead of saying we’re going to charge you more when it’s hot they should have
said we’re going to give you a discount when it’s cold.
City: But were they going to give you a discount when it’s cold
or were they going to charge the normal price?
Landsburg: I don’t know
what “the normal price” means because that’s always changing too.
City: I knew you’d like this idea, but everybody else in the
world hated it. It was viewed as a public relations disaster.
Landsburg: What you
needed to sell it to people was: It’s not just a matter of paying more when
it’s hot. It’s a matter of having a better chance of finding a Coke in a
machine when it’s hot. So often you go to a Coke machine on a really hot day
and it’s empty, and that will happen less.
This
is the solution to the problem of people who only want Cokes a little buying
them anyway because they don’t cost that much. On a hot day some people want
the Coke more than others and this solves that allocation problem. But people
look at it and all they think about is the idea that Coke’s going to make more
money. Maybe better economics education would solve that problem.
Next week:
Landsburg gets into eminent domain, racial profiling, steroids, Payola,
Wegmans, OJ, and Scrooge.
This article appears in Sep 7-13, 2005.
