In Politics, Everyone has to Eat the Olives

In a recent post, Sarah Skwire argued, quite rightly, that one of the great features of the market is that it makes a lot of stuff she doesn’t like. It also, of course, makes a lot of stuff that she does, including the very specific kinds of weird things that individuals like Sarah might wish to consume. For Sarah, the fact that markets produce things like olives and death metal, neither of which she wishes to consume, is great because it means that other people can get their wants satisfied even if she wants no part of them. All that markets require is a commitment to tolerance. If we want the weird stuff that we like, we have to accept the fact that the very same processes that will produce that stuff will also produce things we can’t stand. 

I can assure you from first-hand knowledge that Sarah finds olives highly objectionable. This works to my benefit sometimes, because when they are served at a meal or I buy some at the store, I know they’re all for me, and I really like them. In the market, Sarah is not forced to either buy or consume what she sees as revolting little fruits. 

However, this isn’t true of the political process. What Sarah didn’t address is how her examples might play out under a different set of institutions than those of the market. The nature of collective choice in markets, especially the voting process, which most closely mimics choice in the marketplace, is such that we choose among “package deals” and that everyone must accept the choice of the majority. Electoral politics, by its very nature, cannot abide the tolerance of minority tastes the way that markets do.

In the most simple case, the candidate getting the most votes (or the amount otherwise dictated by the rules) wins, and he or she is everyone’s president/governor/mayor etc. Those who preferred a different candidate don’t get an opportunity to “consume” their political preference, as there can only be one winner. We are all stuck with that person. When we look at policies, the same sort of story applies. Particular candidates or parties will offer a platform full of a variety of policy proposals. Individual voters might like some of those proposals but also dislike some of them. Some voters might dislike nearly all of a candidate’s positions. Whichever candidate wins, or whichever party wins a majority, everyone will be subject to their attempts to put their preferred policies in place, regardless of whether we liked those policies or not. 

Imagine going to the grocery store and rather than picking out the individual items you wish to buy, each store offered a pre-selected bundle of groceries that were available for purchase. Kroger might offer a different bundle than Whole Foods or Aldi, but each store offers only one bundle and you have to buy everything that’s in it. If we push this analogy to its limit, imagine further that you are required to eat everything that’s in the bundle. Similarly, we could imagine restaurants working in this sort of way. 

You can easily see the problems. First, the stores would cater to the median shopper and diner, in a pretty good replica of the median voter theorem. Minority tastes would be largely shut out. Second, very few people would be anywhere close to fully happy with their bundle of groceries or their meal. And if you’re required to eat what you buy, some folks are going to be very unhappy about their meals. I would not look forward to watching Sarah try to choke down some olives. (Though she would be looking forward to it even less!) The overall level of preference satisfaction in politics will be far less than in the market because there’s no way to either satisfy minority tastes or offer specialized versions of common goods that better match people’s preferences. This is the problem with the institutions of collective choice: in politics, everyone has to eat the olives.

The collective choice processes of politics, by definition, don’t allow for the possibility of the tolerance of others’ preferences that is the foundation of the marketplace. This is why so many political battles, especially recently, seem so high-stakes. It’s a winner-take-all game, so those who perceive themselves in the minority have every reason to fight hard, if not cheat.

The more goods and services that are provided through political allocation, the more we will deal with this sort of problem. One need only think about extending the grocery analogy to health care, for example. If we think it’s important that no one is forced to eat the olives, and if we think it’s important that people are able to acquire the particular goods and services they want, we need to rely on markets to the largest extent possible. And doing so requires that we extend a degree of tolerance to the preferences of minorities that politics does not require. As more of our lives are centered around those winner-take-all political choices, the tolerance necessary for markets might become increasingly hard to come by. 



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Chuck Baird: A Fond Memory

I’ve been working with Steve Globerman on a short book on the UCLA School of Economics. It will be published by the Fraser Institute in Canada. Of course we highlight the work of Armen Alchian, Harold Demsetz, Sam Peltzman, and a few others.

I was thinking today of someone we don’t highlight because he didn’t make a large contribution to the academic literature. But he was, and is, a first-rate economist and a master teacher. Thinking back to my first quarter at UCLA, I realize that he was second only to Armen Alchian in teaching me economics. It’s a kind of a funny story, so I’ll tell it here.

I arrived at UCLA, coming down from Canada, in September 1972. I did a courtesy call to various members of the economics faculty. One person I had to get a signature from was Axel Leijonhufvud. I got an unexpected compliment. He said that when he and his colleagues were looking over the incoming class, I was one of the ones they were excited about. And his body language supported his statement: he rubbed his hands together with glee.

I was being paid $440 a month for 9 months for 2 years to be a teaching assistant and my in-state and out-of-state tuition were covered for the first two years also. I had learned to stretch a small amount of money over many months and so, in my view, I had hit the jackpot. In return, I was a teaching assistant. I had to show up for a few hours a week to teach/tutor breakout sessions for the large classes and I also had to grade for the professors for 40 hours a quarter.

Because of Axel’s reaction to me, I started thinking, far too early, that I was hot you-know-what. So when I made the courtesy call to Chuck Baird, the professor whose intro macro class I would be TAing for, I told him that I would drop in from time to time to his class to see what he was doing. In my view, I already knew basic macro and so didn’t need to attend his class regularly.

Wrong strategy. Chuck made it clear in no uncertain terms that I would attend every class. I went away disappointed but not angry.

By the end of his first hour of class the next week, I was no longer disappointed but, instead, eagerly looking forward to future classes.

What happened to cause this? One main thing. Chuck told his class of about 150 to 200 students that he spoke fast and covered lots of ground, as many of them knew if they had taken him for the introductory micro course. So, he said, your best strategy is to plug in a cassette recorder at the front of the room and record the lecture so that in revising your notes, you can fill in any gaps.

Some of you, he said, might not yet have a tape recorder. They’re priced at about $30 and some of you might say that you can’t afford to spend $30. What’s the answer to that objection?

“What is the answer?” I asked myself, not having a clue.

About 20 hands went up. He called on one of them, apparently randomly. The student said:

Learning economics well raises your human capital, your future earning power. Thirty dollars is rounding error on the increment in the present value of future earnings that you will get from this course.

Holy cow, I thought. That’s right.

And I think I can say, though my memory is hazy, that I never missed a class. I learned a fair amount of micro and a ton of macro.




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I’m Teaching at the 2021 John Locke Summer School

I never worked harder than I did in the summer of 2016 at the John Locke Institute‘s summer seminars in France.  One day I gave nine hour-long lectures, and had several more hours interacting with students throughout the day.  But it was great fun; the students were full of curiosity and enthusiasm, and candor ran high.  And the reason I gave so many lectures was that every class was very small – often just five students.

This year, COVID policy permitting, I’m rejoining the John Locke Institute’s summer program.  Now, however, both seminars are in Oxford.  I’ll be doing the Politics, Philosophy, and Economics Summer School from July 18-31, followed by the Humanities Conference from August 12-21.  (Bonus: My sons will be math econ tutors).  In between, we’ll be touring the UK.

If you’re interested in attending, please apply now.  And if you’d like to meet up in Oxford or elsewhere in the UK, let’s try to make it happen!


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The Sunk Cost Lesson Stuck

On Friday, the president of the Naval Postgraduate School, Dr. Ann E. Rondeau, announced that Captain Raymond (“Pancho”) Barnes, Military Associate Dean of the Graduate School of Defense Management (the new name for the school I taught at before retiring in 2017) is leaving his position for a new Navy posting. I haven’t met him during his tour because the in-person part of the School is pretty skimpy and so my biweekly visits to my former colleagues haven’t happened for about a year. But I’ve often enjoyed his emails to the faculty, which include the emeritus faculty.

So I emailed him Friday to wish him well, even though, I said, I hadn’t met him. Well, it turns out that I had. I received this email back.

Prof. Henderson,

Oddly enough, if we go back to Winter Quarter 2005, you were my GE3070 instructor during quarter two of my EMBA [Executive MBA.] I thoroughly enjoyed that course (and your instructional methods), so much so that it is honestly but one of the few courses I actually remember. Economics has always been an interest of mine (if my wife hears me talk about sunk costs one more time during a movie, I think she will divorce me), especially as it relates to everyday life. I particularly enjoy Stephen Dubner’s “Freakonomics” podcast; very interesting and entertaining content.

Thanks for the note; it has been a great tour at NPS. All the best to you as well.




I love it when students remember, and apply, important things I taught them over a decade ago.



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My new article on MMT

I have a new Econlib article, which will appear in two parts. It summarizes the results of my research on MMT.

Note that this sentence in Part 1 has a typo:

“In Singapore, both the interest rate and the exchange rate are endogenous.”

It should have been interest rates and the money supply are endogenous. It might be corrected by the time you read the article.

Thanks to commenter Garrett for pointing that out.


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My Top 12 Blog Posts of 2020


I went through all my blog posts for 2020; there were approximately 250 of them and I singled out 24 for my top posts. That’s too many and so I whittled it down to 12.

Here they are from earliest to latest:

Tales of Socialism, February 6.

Winners, Losers, and Interesting Aspects of the Dem Debate, February 20.

Cost Benefit Analysis of Flattening the Curve, March 24.

Why the Stimulus Bill As Written Will Keep Unemployment High, March 25.

The VSL Quandary, April 12.

Zingales on the Rule of Economists, May 17.

Commissar Komisar, May 21.

Benjamin Boyce Interviews Adrian Lee Oliver, July 15.

What’s the Moral Case for Capitalism?, August 20.

A Partial Defense of Milton Friedman’s 1970 NYT Essay, September 21.

Is Cowen Right about the Great Barrington Declaration? Part 1, October 16.

Vaccines’ Last Hurdle: Central Planners, December 4.

I’m curious what some of your favorites are.


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It’s Not Just Christmas Today, but EVERYDAY!

Christmas is not only a time for rejoicing and celebration, but also a time of gratitude for what we have. In times such as these, in which all of us have been affected by the circumstances related to COVID-19, this is all the more important. It’s for this reason I would like to point out that it’s not only Christmas today, but every day. What do I mean by this? To answer this question, I’ll provide a lesson from my mother.

My mother was born in a town called Carini, in the Province of Palermo, Sicily. She was born and grew up in a home with no car, no television, and no air conditioning. After she migrated to the United States in 1971, see never thought of returning to her hometown, and always reminded us how wonderful life in America is.

It was 30 years today that she imparted on me a lesson, one that I will never forget and that I only fully appreciate now. It was an important lesson of economic development and the blessings of a free society that she taught me, even though my mom never made it to high school. She would reflect on her own childhood, telling us that the smell of oranges would remind her of Christmas.

What’s baffling about this story is that, even before my mom was born and to the present day, Sicily remains the largest producer of oranges in Italy, and a major producer of oranges and other citrus fruits worldwide. You’d think, in spite of the poverty within which she was raised, she would enjoy oranges on a more regular basis. Yet, today, most us enjoy (or can enjoy at little cost) and take for granted what had been a luxury that was consumed during Christmas, even amongst those residing in a part of the world where they were grown in relative abundance.

My intention here is neither to secularize nor undermine how special and joyous the Christmas season is. Rather, it is to express gratitude and place in perspective what the beneficial consequences of economic development are, and not to take for granted how new in the history of humankind our way of life is, even during times as hard as this. The point here is that one of the fruits of economic development, and the institutional preconditions that facilitate it, namely private property and freedom of contract under the rule of law, not only provide the framework to practice religious freedom, but also allows the masses of the population to get just not a smell, but a taste of Christmas every day.


Rosolino Candela is a Senior Fellow in the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics, and Associate Director of Academic and Student Programs at the Mercatus Center at George Mason University






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Open Borders: Pegg’s Essay Questions

IUPUI‘s Scott Pegg assigned Open Borders this semester, and kindly gave me permission to post the following essay questions on the book.  Enjoy!

Please answer one of the following four questions. Because this is an open book, open time assignment, I expect to see some detail and specificity in your answers. References to Caplan and Weinersmith’s book Open Borders: The Science and Ethics of Immigration should be made whichever question you choose. Your answers should be somewhere in the vicinity of 3-5 pages double-spaced typed in Times New Roman 12 point font. Take as much time as you need to answer the question. This is not a timed exam.

1) Explain why Caplan and Weinersmith believe that “open borders has jaw-dropping potential to enrich migrants and natives alike” and “is a shortcut to global prosperity.” Upon what causal logic or what empirical findings do they base these claims? How does open borders compare in this regard to other potentially enriching policy changes like freer trade or greater global financial integration that we could pursue? Indicate whether you find Caplan and Weinersmith’s arguments that open borders potentially offers the prospect of “trillion-dollar bills on the sidewalk” convincing or not.

2) In 2016, Americans elected Donald Trump as their president. One of his central campaign promises was to restrict immigration into the United States and build a wall to keep immigrants out. In 2020, President Trump faces a tough re-election battle but will likely carry the state of Indiana where we live easily. Given that, it’s probably not unreasonable to assume that give or take a majority of students in this class share views on immigration that are closer to President Trump’s than they are to the views expressed by Caplan and Weinersmith in Open Borders. Highlight which arguments put forward in Open Borders you most disagree with or find the most problematic and explain why. Make, develop, and support the best critique of the ideas put forward in this book that you can.

3) In attempting to make their case for a more open and less restrictive system of immigration, Caplan and Weinersmith consider several objections to open borders including immigrants threats to low-wage workers, freedom, our government’s fiscal position, our culture or way of life and even lowering our average national intelligence (IQ) score. Give specific examples of how Caplan and Weinersmith undermine these critiques or sources of opposition to their ideas or what they suggest as solutions to overcome these fears. Indicate which criticisms, if any, you think they effectively address and which criticisms, if any, are still strong or effective arguments against open borders.

4) Open Borders is premised upon the idea that “we live in a world of global apartheid. An apartheid based not on the race of your parents but on the nation of your parents.” Caplan and Weinersmith go on to argue that “It’s wrong to tell people where they can live or work because they are black… or women… or Jews. Why isn’t it equally wrong to tell people where they can live or work because they were born in Mexico, Haiti or India?” While these sentiments appeal to our better angels, they are completely unrealistic at a time when the US doesn’t even have open borders with Canada. Explain why Caplan and Weinersmith believe that “even if open borders never wins, the ideal can still serve as our moral compass.” What kind of progress can we or should we make short of fully opening borders?


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