Mad Money Machine

MMM-079: Meta EconTalk with Russ Roberts

An interview with the host of my favorite podcast: Russ Roberts of EconTalk available in iTunes and at EconTalk.org. Why economics is not boring. Background about his show. Hayek, Wikipedia, and Libertarianism.

I ENCOURAGE you to Download this show thru iTunes!

But, if you just can’t possibly deal with that then go ahead and
Play the new show right now

MMM-079: Meta EconTalk with Russ Roberts [ 55:49 ] Play Now | Play in Popup | Download

Of the 125,000 podcasts that Apple says are available in iTunes, EconTalk hosted by Russ Roberts is my favorite. I had the privilege of interviewing him today to find out more about his podcast, how and why he got into economics, what a listener might want to know before listening to EconTalk, and then how to solve some of the world’s problems through better economics.

Russ is interested in making economics understandable to the non-economist. Economics is more than just the stock market, interest rates, and inflation. It is about scarcity and making choices.

He blogs at CafeHayek.com. He writes novels. He does the EconTalk podcast.

He was good in Economics in high school. Started doing more unusual things like writing novels to communicate the ideas in economics. He believes we live in an incredible time due to the wide availability of information on the Internet.

We discuss the economics of EconTalk itself. He does a mix of interviews, some face-to-face, some over the phone. He interviews some colleagues and other notables in economics. The podcast is part of a project at Econlib.org. Also the Online Library of Liberty. Classic works are online such as Adam Smith. They have a concise encyclopedia of economics which Russ says is an incredible resource.

His book The Choice is a primer on trade written in the form of a novel. A dialog between a fictional television factory manager in the 60’s who is worried about competition from Japan. Be sure and read the newest, 3rd edition which is updated for contemporary issues (and is actually cheaper). His thesis is that trade is overwhelmingly beneficial for those who participate.

His new book might be called The Price of Everything. It is about how the modern economy allows us to plan and dream and fulfill our desires of a wide variety both material and non-material that don’t require a central planner. Our various dreams weave together smoothly. He points out why we have the most successful economy in history. Why do we take it for granted? A train is the wrong metaphor. Instead, it is a tremendous, organic thing that is hard to harm. It will come out next year by Princeton University Press.

He says many books have come out recently about economics for people with no economic background. Recommends books like those from Steve Lansberg, Tim Harford’s The Undercover Economist, Robert Frank’s The Economic Naturalist, Tyler Cowan’s Discover Your Inner Economist. Freakonomics, Freedomnomics. Thomas Sowell’s Basic Economics.

How do we deal with the incredible flood of media and information that is available to us today? Russ says we will always look for filters to help us choose the things to see, hear, and read. The non-centralized, self-organizing techniques that are emerging to help make recommendations of what information and entertainment to consume. He says we are still at the beginning and things are continuing to get better and better.

We briefly discuss how to better raise children. We don’t need to teach them PowerPoint and keyboarding. Instead, play with them athletically and through great boardgames like Settlers of Catan and Puerto Rico. And read, read, read.

I ask him how he responds to the dreaded question at parties: “So what do you do?” He used to say he writes novels about economics.

I ask about three things that seem to recur on EconTalk: Hayek, Wikipedia, and libertarianism. Russ says his shows may vary on their level of discourse from highly sophisticated to those more for beginners. Hayek’s central idea is that of self-organizing system or the way that markets coordinate knowledge via prices. He discusses an example from The Invisible Heart that talks about why the Bagel store never runs out of bagels even though people didn’t place their orders ahead of time. And you can even buy croissants on the number one pizza day of the year: Super Bowl Sunday. These self-organizing systems without a coordinator look organized.

Wikipedia works amazingly well even with its distributed editing. Libertarianism allows freedom to work.

If Hayek were a financial planner, he would recommend index funds. Russ says he himself invests in index funds. It is difficult to find a market opportunity before everyone else and anything else means it is too late.

I ask if all good economists end up as libertarians. Russ says no, there are those who disagree with him and want more government regulation.

Would an economist buy a battery tester from Radio Shack? That is, do we trust that their tester doesn’t lead one to believe that batteries wear out faster than actual in order to sell more batteries. Russ gives the example of toothpaste tubes where you can’t get the last drop out. Conspiracy? Russ thinks not. Competition is an extraordinary way to protect consumers from other money-making incentives.

I ask whether he believes that one should be free to do as one wishes as long as he doesn’t disturb his neighbor. Leonard Read wrote Anything that’s Peaceful with the them that as long as you don’t interfere with others, its OK. But the interesting case is our paternalistic urge to protect others. But this doesn’t justify intervening in their lives. The other issue is not just that of physical harm to others but this notion of psychological harm to others. What if a neighbor is offended by some magazine we subscribe to? Even if they don’t see it. Russ thinks it is a road to tyranny, government control, and dangerous things like the reduction of freedom. We are starting to get intolerant to what people eat: smoking, meat, fat, candy, calories. But the logic of saying that if ANYTHING you do impacts me in some negative way is wrong. We should just focus on physical harm, not the psychological

I ask if he is optimistic that people will understand more about economics and thus make the world a better place. He sees in the longer view a march toward human freedom. 2100 will be better than 2000 even though we will see ups and downs. Material progress has been a tremendous change, the number of people in desperate poverty has gone down.

Having said that, the political system we operate under has some inherent institutional barriers to freedom. The two parties reduce competition. But he is optimistic. He recommends his collegue Bryan Kaplan’s book The Myth of the Rational Voter on how the political process works and how economics is misunderstood.

I ask about obesity and economics and he did talk with someone about this on EconTalk. The basic idea is that food is cheap and continues to get cheaper. Should we tax bad food? No. That’s not the way to fix things. We must restrain from restraining others. People need to be more disciplined. We check our email too much, for example. Basically, we need more discipline. While he advocates watching less TV, and has gotten rid of cable TV at his house, he is not in favor of the government regulating TV watching. That is treating us like children instead of adults. Instead we need to figure out as adults how to eat less and exercise. “Most powerful governments do evil. There are very few powerful governments that were benign and benevolent.”

I ask Russ where he thinks the stock market is headed. 😉

The Mad Money Machine is proud to be sponsored by Index Funds Advisors at ifa.com.
Email me: feedback at Mad Money Machine dot com, or comment, or Call me on the Mad Money Machine voicemail line at 206-734-4763