Part two of a
two-part series.
Some
people live their lives according to religious principles. Steven Landsburg
looks at life through the filter of economics. And if you read a selection of
his books or magazine columns, you may be persuaded that economics play more of
a role in your life than you realized.
A
professor at the University of Rochester, Landsburg does research in the
complicated field of quantum game theory. A leading author in the discipline,
he’s also written a top-selling Microeconomics textbook.
But
Landsburg also has some pop-cultural cachet, thanks to his ability to apply
economic theory to real-life situations. In addition to his monthly “Everyday
Economics” column for the online magazine Slate,
Landsburg has written regularly for Forbes and occasionally for The New York Times,
the Washington Post, and the Wall Street Journal. His 1993 book, The Armchair Economist, continues to
sell.
In
his spare time, Landsburg creates cryptic crossword puzzles. He also cares
enough about modern poetry to have posted his favorite poems on his website,
www.landsburg.com/about2.html.
In
part one of our interview, published last week, Landsburg talked about his
views on fair trade, outsourcing, reparations for African-Americans, fair
housing, and his notion that more sex would be safer for all of us.
In
part two, Landsburg discusses the Supreme Court’s recent ruling on eminent
domain, racial profiling, steroid use in sports, Payola, Wegmans, and Scrooge.
City: What do you think of the recent Supreme Court decision
saying privately owned land can be seized — bought by force — if a local
government believes it would be better used by a business enterprise?
Landsburg: I was made
very unhappy by it. I noticed on the web there is a group seeking to use
eminent domain to seize Justice Souter’s house and turn it into a hotel.
There
were a lot of things in that decision that I found really appalling. They said
the justification for doing this could be more tax revenue, as if tax revenue
were some sort of social good. Anything the government gains from tax revenue
is coming out of someone’s pocket. There’s no net gain there.
The
question of how much tax revenue we want to raise to carry on legitimate
government functions is quite independent from the question of where the
shopping centers should be.
City: What do you think of the economics of random checks for
terrorists at airports and now the New York City subway system?
Landsburg: I said in a Slate column that the solution is to
profile like crazy but compensate people. When you search them, give them $10.
City: What’s your take on the skewing of statistics and of the
competitions themselves when athletes use steroids?
Landsburg: It’s strictly
a question of what the sports fans want to see. Do they enjoy the sport more if
everybody is all tanked up on steroids and performing better or do they enjoy
the sport more if they know that’s not going on? Clearly it is to the advantage
of the athletes as a group to enforce the contract that says none of us will do
this. It is to the advantage perhaps of any individual athlete to violate that
contract.
City: Do you have any thoughts on the latest Payola scandal?
Landsburg: I didn’t
follow it closely but I’ve never understood what the objection to Payola is.
Certainly cereal companies pay Wegmans for shelf space all the time.
City: But not all of us think it’s OK that Wegmans and other
markets charge companies for shelf space. Wegmans doesn’t have certain products
that people want as a result of that policy. If you listen to some obscure but
good music aren’t you upset that big companies can pay radio, in effect, not to
play music that other people would benefit from hearing and instead play crap
they want to sell?
Landsburg: As a general
rule I think these companies have all the right incentives to buy time for that
music that they think people are going to like. It’s a waste of money to buy
time for music that people aren’t going to like. Another point is nowadays it’s
easy to find any music that you like on the Internet. People aren’t dependent
on the radio anymore.
City: I want to look at your Slate columns. Two years ago you
wrote a column suggesting punishing juries that get things wrong. As I read it,
I thought you were not factoring in the strength of the lawyers in presenting
the evidence. For instance, the conventional wisdom is that the jury that
declared OJ Simpson not guilty got it wrong. But can the jurors really be
blamed for the circus the judge allowed to go on?
Landsburg: No matter
what activity you’re engaged in, the rewards and punishments you get are partly
tied to your performance and partly tied to things you have no control over and
that are completely unfair. In every other area of life that I can think of, we
have systems of rewards and punishment that are set up to give people an
incentive to get things right.
People
lose their jobs for reasons that are not their own fault; businesses go under
for reasons that are not their fault; somebody decides they don’t love you for
reasons that are not your own fault. Nothing is fair, but we do try and set
things up so people have incentives to get things right. I don’t see why juries
should be an exception to that. Right now they have no incentive to get things
right.
City: How would you really know if they got it right or wrong?
Landsburg: Now and then
you’ve got a case that doesn’t go to trial because it’s been settled; somebody
confessed or somebody was completely exonerated. My idea was to go ahead and
try those people anyway, but don’t tell the jury what you’re doing. Ignore the
verdict, but reward or punish the jury appropriately if they get it wrong or
right. Then every juror on every case will know that there is some possibility
that this is one of these mock cases.
City: What’s your take on the inevitable Social Security crisis
we’ve been hearing about?
Landsburg: The crisis is
not in the system, it’s in the economics. It’s in the fact that there are going
to be a lot more old people in 20 years and they’re not going to want to work
but they’re going to want to keep eating.
That
sets up a political conflict where they want young people to give them more and
young people want to give them less. That seems to be almost more of a
political issue that’s going to play out however it does as a result of the
political power old people have and the political power young people have. I
don’t think there’s much we can do now to affect the way it’s going to play
out.
City: I want to talk about some of your more contrarian ideas.
Last Christmas you wrote a column in praise of Ebenezer Scrooge.
Landsburg: There’s a
tradition in the Wall Street Journal and other places of praising Scrooge for his greed. This had nothing to do with
greed, this was about miserliness, which is a different thing altogether.
Scrooge’s
miserliness meant he consumed less, which meant there was more for other people
to eat. It’s a reason to be glad when our neighbors consume less. It also feeds
into the issue of why a consumption tax is a good thing.
Scrooge
accumulates more and more wealth. It doesn’t hurt anybody. He’s holding a bunch
of gold and nobody wants that gold for anything anyhow. It’s not something you
need; it’s not something you can build a house out of. As soon as he starts
exchanging gold for food, then other people start going hungry.
City: You are against bi-partisanship.
Landsburg: Bi-partisanship
seems to me to be a form of collusion, and economists know all sorts of reasons
why collusion is a bad thing. We want the parties competing with each other.
One
problem with political parties is they can become corrupt. They can pass
legislation that essentially channels wealth to themselves. Part of the reason
we have competition is that when one party gets greedy, the other party can
point that out and promise to be less greedy. When they’re talking to
each-other they can conspire to both be greedy and share the wealth.
City: You were also upset when your daughter’s pre-school teacher
was indoctrinating her with environmentalism.
Landsburg: There are a
lot of environmental issues that are absolutely important and raise serious
issues, but a lot of the environmentalism that my daughter was taught in school
was not thoughtful environmentalism.
It
was a blind view that completely ignored that fact that our environment
consists not just of trees and plants and animals, it also consists of the cars
we drive and the air conditioning in our houses. There are difficult trade-offs
and we need to think about them.
City: Are you opposed to the idea of a minimum wage?
Landsburg: I think it’s
a terrible policy. For one thing the idea is to help poor people, but it doesn’t
help poor people. It helps a certain, very specific group of poor people. If
you want to help poor people, I don’t understand why you’re not giving money to
poor people. The burden is inappropriately spread out. In terms of what you’d
want to accomplish, the earned income tax credit does a much better job than
the minimum wage.
City: So if people ended up working for $2 an hour, that would be
OK with you.
Landsburg: Sure.
City: In a recent column, titled “Feed the Worms Who Write Worms
to the Worms,” you suggest the death penalty for computer virus writers. You do
some calculations that estimate the benefit of executing a murderer to be, at
the high end, $100 million, while the benefit of executing virus writers would
be higher.
Landsburg: The purpose
of that column was to illustrate and to argue that we should decide these kinds
of issues on a cost-benefit basis and to make a real argument for why it would
be a good thing. In order to illustrate, I pulled some numbers out of the air.
I pulled a number off the web of $50 billion worth of damage from these guys. I
have no idea if that number’s right or not. But I wanted to illustrate a way of
thinking.
City: In a column that I’m sure drew a large response you
suggested thinking of Terri Schiavo as a toaster on the basis that her husband
wanted to discard her and her parents, in effect, wanted to retrieve her.
Landsburg: I’m wrestling
with stuff I’ve been wrestling with all my life: When we make policies, whose
preferences should count? The standard answer is that all preferences matter
and that all preferences should go into the decision, and that’s why we like
markets because markets respond to everybody’s preferences.
On
the other hand, it seems intuitively clear to me that there are some
preferences we just don’t want to cater to, such as a preference for censoring
what people read. It seems to me that even if you get enormous pleasure out of
censoring what I read, I don’t think people should care about that and I don’t
think that should be given any weight in making policy.
In
the Schiavo case, it seemed to me that [her husband] essentially wanting to
discard her body was of a piece with people wanting to censor what other people
read. It was not doing him any good and it was stopping other people from doing
what they wanted to do.
How
sure am I that I’m right about that? Not very, because I have no coherent
theory about what preferences should count and what preferences shouldn’t
count. My gut feeling was that the preference to discard something that someone
else wants to use is a preference we should ignore.
City: In “The Armchair Economist” and in much of the rest of your
writing there’s this idea that if only economic logic was used in more
situations, the world would benefit greatly.
Landsburg: Human beings
are bundles of irrational impulses, there’s no doubt about that. I tend to
think we have a better chance of understanding the part of people’s behavior
that is rational than the part of behavior that’s irrational, so it’s
productive to concentrate on that. Economic logic helps us understand the
world, and I think that understanding is a good thing.
This article appears in Sep 14-20, 2005.
