June 20, 2020 Reading Time: 5 minutes
trial, person

I have the great honor this summer of serving as one of the Julian Simon fellows at PERC (Property and Environment Research Center) in Bozeman, Montana.

Julian Lincoln Simon, aka the Doomslayer, was an advertising and marketing professor who loved liberty because he understood it more fully than most. Judging by his book Hoodwinking the Nation, published posthumously in 1999, he would have considered the COVID crisis as just another in a long line of “false bad news” stories made possible by misaligned incentives in government and government-sponsored research, the seductive and bewitching power of “exponential growth models” (p. 2), the impoverished state of journalist training and education more generally, and the willingness of some activists to “lie when they are convinced that the eleventh-hour danger to the public justifies such dishonest practices” (p. 3). 

That sounds a little bit like Dr. Fauci telling people not to wear masks, then to wear them to protect other people, then everyone should wear them, and whatever he will say next week on the matter. 

Simon pulled few punches, arguing that “joining the environmental movement is seen by many as a last chance to do good, just as joining the Communist Party in the 1930s seemed an opportunity for social contribution by many generous-minded people” (p. 3). He also hinted that the elderly become more gullible as they age (p. 16), falling for government misinformation about “declining farmland” as easily as they fall prey to scam artists

Most famously, though, Simon wagered Paul Ehrlich, the recipient of a MacArthur “genius” award and author of the doomsday classic The Population Bomb, that during the 1980s the prices of five metals, chosen by Ehrlich, would decline in real terms, not jump through the roof as Ehrlich predicted. Simon won that bet ($576.07) because he knew that “natural” resources are ultimately human resources. 

For stuff that comes out of the ground to have economic value, somebody has to recognize that it can be used to produce a good, something people want. If its price gets too high, somebody will figure out how to get more of it, or to supply that want in other ways more cheaply. If traditional timber prices go too high, people will use metal or plastic instead, or they will figure out how to use wood scraps, like in particle board, or how to turn fire or beetle-damaged timber into usable products, like in cross-laminated timber.

What has always most impressed me about Simon was not his understanding of demographics or resource economics, as impressive as he was in those areas. It was his willingness to put his money where his mouth was. Too often, scholars and even policymakers talk out of their backsides. They make claims that are trivial, not-falsifiable, or plain wrong. Or they write in such circumlocutions that their point, if they have any at all, remains unclear.

Imagine if their only source of income was winning wagers with other putative experts. Many would soon starve due to their inability to find a counterparty. Others would make many bets but lose most of them and soon move on to other, easier endeavors. Those remaining would be la creme de la creme and might actually be worth listening to on TV or in policy debates. Such a system has an analog, those who make a living trading financial securities.

But that is not the system we have. Instead, putative experts get jobs based on their education, which is highly correlated with their gender, race, and religion, and their experience, which is usually so specialized and esoteric that it cannot be evaluated even by the hiring supervisor. Connections, which stem mostly from the aforesaid education and experience, seal the deal. And then we wonder why so many fields are dominated by white men from comfortable family circumstances and why so many range from completely incompetent to barely functioning.

If we do not want to go full meritocracy via Simon-esque real world wagers, then we should move to random draws from pools of qualified candidates. If X wants a Y, then X should advertise for qualifications Z on terms AA, inform rejected applicants why they did not meet Z, then randomly select one of those who did, with the expectation that the literally lucky qualified applicant will accept. Professorships, policy posts, and even corporate directorships could be filled this way. 

A random pull would increase diversity by ensuring an equal chance for all qualified candidates, even minorities like African-Americans, women, and classical liberals. Over time, it would also increase the portion of minorities in qualified candidate pools as they learn that they, too, have a real chance (1 over the qualified applicant pool) to work at a prestigious place if they work hard and well enough to obtain adequate qualifications and experience.

And, yes, I am willing to wager on it. Five figures.

But do you know who isn’t willing to wager anything on anything? Those with the most political power. The higher the position, the less real skin they have in the game, which is a fancy way of saying they are immune, often without qualification, to the real world effects of their policy decisions. Oh, they may lose the next election but most are independently wealthy, if not private island rich at least well off enough to hire a ghostwriter for a six or seven or eight figure book deal and speaking tour. But if their policies pleased a slim majority (of the electorate, not even everyone in their districts) at the expense of a minority, a despised one or not, they will be re-elected. They might even win in a landslide if they were clever enough to hide the costs of their policies, or impose them on future generations.

Imagine a system, though, where politicians and policymakers put their net worth on the line, where before a policy could be implemented they had to pledge a portion of their estates or future incomes on policy outcomes. Imagine if Governor Cuomo had said in March, “I think lockdown policies are necessary to keep New York State COVID-19 deaths below 10,000 by 1 June and have posted $10 million with a custodial bank in support of those policies, with the proceeds slated for the state treasury if events prove me wrong.” 

Unfortunately, it is too late to wager that had he made a credible commitment like that a lot of his elderly victims would still be alive today. At the very least, though, propaganda like “we are all in this together” would ring less hollow and he would be seen as more of a leader and less of a power-hungry, scientifically-illiterate politician who rode his daddy’s legacy into office and now likely regrets it. (I know his poll numbers are up but that is what I hear from many friends and relatives in my native Western New York.) The sums pledged do not have to be large relative to the trillions routinely thrown around policy debates now, just of significance to the policymaker or politician, just so long as he or she winds up wearing nothing but a barrel if they make a big mistake.

Another approach to the problem would be to end the immunity of all politicians and policymakers, not just that for police officers, so that they can at least be sued in their personal capacities if they fudge up. That might make it harder to recruit leaders, but I doubt it. It will, though, make decision-makers think twice or thrice about gambling other people’s money or toying with the lives of hundreds of millions to extend the lives of an unknown but much smaller number of people.

Robert E. Wright

Robert E. Wright

Robert E. Wright is the (co)author or (co)editor of over two dozen major books, book series, and edited collections, including AIER’s The Best of Thomas Paine (2021) and Financial Exclusion (2019). He has also (co)authored numerous articles for important journals, including the American Economic ReviewBusiness History ReviewIndependent ReviewJournal of Private EnterpriseReview of Finance, and Southern Economic Review. Robert has taught business, economics, and policy courses at Augustana University, NYU’s Stern School of Business, Temple University, the University of Virginia, and elsewhere since taking his Ph.D. in History from SUNY Buffalo in 1997. Robert E. Wright was formerly a Senior Research Faculty at the American Institute for Economic Research.

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