Michael Munger was an absolute hoot! If Ron had him as a professor in college he might have become an economist!
Before we get to the show notes, a bit more about Michael:
Professor Michael Munger received his Ph.D. in Economics at Washington University in St. Louis in 1984. Following his graduate training, he worked as a staff economist at the Federal Trade Commission. His first teaching job was in the Economics Department at Dartmouth College, followed by appointments in the Political Science Department at the University of Texas at Austin 19861990 and the University of North Carolina at Chapel Hill 19901997. At UNC he directed the MPA Program, which trains public service professionals, especially city and county management. He moved to Duke in 1997, and was Chair of the Political Science Department from 2000 through 2010. He has won three University-wide teaching awards the Howard Johnson Award, an NAACP Image Award for teaching about race, and admission to the Bass Society of Teaching Fellows. He is currently director of the interdisciplinary PPE Program at Duke University.
Ron’s Questions: First Segment
Well, Mike, we had you on the last time in May of 2018 (May 2018, Episode #190). So just real quick, how have you been holding up with COVID? How's it affected your work at Duke?
That's great. Well, you know, last time we had you on we talked about your book to Tomorrow 3.0, which had just come out that year in 2018. This time, I'm dying to talk to you about your 2019 book, Is Capitalism Sustainable? Is it true, that’s a collection of different essays you wrote between 2005 and 2019?
So before we give the spoiler alert, and you give the answer to the question—is capitalism sustainable?—why did you feel the need to put that book together last year?
Right. No, you talk a lot about that. And I want to get there with you. You also gave the definition of sustainability, I think, from the Environmental Protection Agency's website: “the meeting the needs of the present without compromising the ability of future generations to meet their own needs.” Using that definition, Mike, is capitalism sustainable?
You call it the road to cronyism. And do you see any path off that road if we stick with democracy?
No, that was brilliant. You anticipated my next question, because you said the most important concept in political economy is permissionless innovation. I thought that was a pretty profound statement because we've had Adam Thierer on (Episode #294, June 2020) and he wrote that book, Permissionless Innovation, and he also wrote another one called Evasive Entrepreneurs, how the Ubers of the world go around the regulation. So you're somewhat optimistic as long as we have that constant dynamism, that constant creative destruction, and entrepreneurs, that we can overcome the road to cronyism?
Ed’s Questions: Segment Two
We're talking with Duke University's Professor Michael Munger about his book Is Capitalism Sustainable? and other topics. I thought I would be remiss Michael if I didn't ask you about something that has come up in the news lately. I think September 13th was the 50th anniversary of what's known as the Friedman Doctrine and his article The Social Responsibility of Business is to Increase its Profits. And the New York Times had a huge symposium about it. But I wanted to get your thoughts on this, because this is something that 50 years on, we're still talking a lot about. The fact that corporations need to do more than just produce profits, they need to sustain something else, they need to create value for society some other place. What are your thoughts on the Friedman Doctrine?
I'm glad I got you riled up on a Friday. Well, if that gets you going, you're going to love my next question, which was an article that came across my desk from, of all places, Teen Vogue, which is now banned in my house by the way. So here's the quote, ready? “Capitalism is defined as the economic system in which a country's trade and industry and profits are controlled by private companies”… Here's the kicker…“instead of by the people whose time and labor powers those companies.”
Yeah. And one more we got about two minutes before the end of this segment, but this is one that I came across from an article in a Canadian magazine called Canadian Dimension. The author is Richard Wolff. And he says in “COVID-19 and the failures of Capital”: The result is that neither private capitalism nor the US government performed its basic duty of an economic system, to protect and maintain public health and safety. US capitalism response to the coronavirus pandemic continues to be what it has been since December of 2019, too little too late. It failed. It is the problem. And I look at the world, because you kept Kiwi fruits in all of the stores throughout the entire pandemic, and you but you couldn't buy napkins or toilet paper and you were upset that it's a failure of capitalism. This is absurd.
Yes.. And we've been referring to it, I think this was Bob Murphy who referred to it as “The Great Suppression” [it was Gene Epstein who first said that, not Bob Murphy]. I love that.
Ron’s Questions: Third Segment
Well welcome back, everybody. We're here with Duke University Professor Michael Munger. And Mike, in your book, you talk about Dan Ariely the author of Predictably Irrational, we've also had him on (Episode #43). But you make a really good point about the behavioral economists in general, that they take a large number of dim bulbs, and they say but once they get together in a mob they can suddenly solve all these problems, and you're talking about by voting. And then they stop there, and they talk about the weaknesses of the market and people's irrationality, but they never apply it to government.
That brings to mind the [William F.] Buckley quote, “I’d rather be governed by the first 500 names in the Boston phone book rather than the faculty at Harvard.
That's true. You know, another thing you do really well in the book are your chapters on price gouging, and anti-price gouging laws, they’re just brilliant. You lay out the three problems. But give me the best case you can for why these laws are so irrational?
Then you make another point that I think is really profound is the guy that comes off of his couch watching the football game in Ohio and brings generators and needed supplies to a disaster area, he gets arrested versus the guy who does nothing.
And you also compare it to laying siege to a city. Yeah, that would be an act of war if an army did it. But we call it public policy
It’s amazing. You know, Mike, I'm out here in California where we're being just inundated with wildfires. And, of course, it's all blamed on climate change. But the whole carbon emissions “market failure,” we need a carbon tax. I'm sure you've heard this. But you've taught me, and other economists have taught me that prices are not an input to the process, the result of a discovery process. How confident are you that government knows what the right price is to put on the carbon tax?
Great, great point. The other part of your book that I really enjoyed was you take on recycling pretty strongly, and you have this acid test for determining whether something is a resource, or garbage. Can you explain that?
And as you point out, whether the government separates our trash or we do it, it's a waste of labor.
This has been great. I've really enjoyed it. Thank you so much Mike for coming back on. Ed's going to take you home in the last segment. But thank you so much. It's always a great pleasure.
Ed’s Questions: Fourth Segment
We're back with Professor Michael Munger of Duke University. During the break, folks, Michael and I found out that we're both running for our respective Texas and North Carolina House. So let's talk a little bit of politics. We talk a lot about business and government but what about this thing called the duopoly? This thing led by that Commission on Presidential Debates, which sounds so official, that is a wholly-owned subsidiary of the Democratic and Republican Party. How do we take down the duopoly?
And one of the things I want to ask you about. There's a fairly controversial issue in the Libertarian Party. What do you think about going to rank choice voting is a potential workaround around that first past the post and would encourage more parties; like what they're doing in California, which is the open primary system, and you just have the top two, which of those in your mind the better of the two?
Yeah, my favorite this week has been all the people I've had to educate on “A vote for Jo Jorgensen is a vote for”…and fill in the candidate they oppose. By what logic do you get there at all? It really burns me, it is just so condescending to say that my vote on principle is really a vote for something that I detest.
Or if you really thought that your vote needed to mean something you would move to Wisconsin, because where you live in California or New York is not going to matter. Well, before we started, I made this joke about the Supreme Court Justice Ruth Bader Ginsburg dying two weeks ago when it seems like it was 10 years with this new cycle. And I know that something that Russ Roberts has talked a lot about is this political discourse is just getting more and more sour and the tribalism. How do you see us emerging out of this at some point, or is this may be going to get worse? Have we reached the bottom of the barrel in your view?
All right, well, you got a lot in there. Michael, thank you so much for joining us on The Soul of Enterprise. This has absolutely been a blast. And hopefully we will, one day when all of this starts to lift, my brother as I mentioned to you last time also works at Duke. So I would love to come out and have a beer. Maybe I can sit in between you and Dan Ariely, that would be great. Thanks for being on The Soul of Enterprise.
A Few Extra Links For You…
We had such a wide ranging conversation with Micahel Munger and we didn’t want you to miss these links. They are not endorsements (as you will see from the Teen Vogue link) but they were points of discussion during the show.
A Friedman doctrine‐- The Social Responsibility Of Business Is to Increase Its Profits
“There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception fraud."
What 'Capitalism' Is and How It Affects People
Capitalism is defined as an economic system in which a country’s trade, industry, and profits are controlled by private companies, instead of by the people whose time and labor powers those companies.
COVID-19 and the failures of capitalism
The result is that neither private capitalism nor the US government performed the most basic duty of any economic system: to protect and maintain public health and safety. US capitalism’s response to the coronavirus pandemic continues to be what it has been since December 2019: too little, too late. It failed. It is the problem.
Bonus Content is Available As Well
Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.
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New this week!
Bonus episode 311 - DJT C-19 and more. Here are a few links we discussed: