How Moms Both Challenge and Confirm Standard Economic Theory

By Sarah Skwire

Last winter, I was getting ready to put insulating plastic on all of my windows to keep the cold out. I quizzed my Facebook friends to see if they could use the economic way of thinking to predict which room’s windows I would insulate first. They had some good suggestions. Maybe the coldest room? Maybe the kitchen, because it gets the most use? Maybe the room with the largest windows?

They were all wrong, and they were wrong because I don’t really do economics. I do momonomics. Momonomics is the particular kind of economic thinking engaged in by parents. (All parents use momonomics, even dads. I just think momonomics sounds better than parentonomics.) If you practice momonomics, you know that the windows that get covered in plastic first are the ones in the kids’ rooms, because you can do that in the half an hour the kids are spending watching Phineas and Ferb and then get the rest done while they’re in bed and not in the way. Also, the children are tiny and cold, and you feel sorry for them.

The factor that makes momonomics different from other economic ways of thinking is that children are the primary binding constraint.

The factor, in other words, that makes momonomics different from other economic ways of thinking is that children are the primary binding constraint. Here’s an example of what I mean.

Economics says that all goods have substitutes, but momonomics knows this is nonsense. Momonomics says that sometimes you’re going to have to turn the car around and drive two hours back to the hotel where you stayed last night in order to rescue one very special doll from the hotel laundry. (Thanks, btw, Mom and Dad. I still have her.) Economics says that a blanket may have a substitute, but momonomics says that the blanket does not. Sometimes demand curves are vertical, and price is infinite.

Economics takes preferences as given and explains why actors behave the way they do. Momonomics knows that preferences are mysterious and behavior cannot be explained, especially when the actor is under three feet tall. In fact, the job of the momonomist is often to restructure given preference sets and to alter behavior. We want you to eat your vegetables first, even if they don’t taste as good as tater tots.

Sometimes momonomics helps to reveal hidden economic secrets. We all know economics values efficiency. So some people might think that because the gas station is between the office and the day care, you should stop for gas on the way to pick the kids up. Momonomics knows this doesn’t make sense if the kids go out of their minds if they aren’t picked up at their usual time, and they really like to help put gas in the car. So momonomics schedules that trip in a way that makes momonomic sense and that, once the constraints are fully understood, makes better economic sense as well.

Economics thinks expressed preferences are important, but often mysterious. People want strawberry Pop-Tarts after natural disasters because they do. It’s not particularly important why. Momonomics can help unpack those preferences, reminding us that strawberry Pop-Tarts are a kid-friendly food that provide a burst of energy and a comforting familiarity; also, they don’t require any cooking, and they don’t make a mess.

Just as frequently as momonomics challenges economic theory, momonomics helps to confirm the practical applicability of economic thinking.

Economics reminds us that we live in an environment of scarcity. Momonomics agrees and says that because your sister finished the cinnamon Life cereal, you have to have peanut butter Cheerios for breakfast.

Economics reminds us that, just like every other resource, time is subject to scarcity constraints. Momonomics agrees, and wouldn’t sell you the hours between kid bedtime and grown-up bedtime for a gold nugget.

Economics knows that because time is a resource, sometimes the order in which you use other resources matters. Momonomics agrees. That’s why we’re having salad for dinner tonight, and frozen peas at the end of the week. And take a banana for a snack while you’re at it — they’re starting to get brown.

Economics knows that capital is heterogeneous. So does momonomics. That’s why if you don’t take the banana today, there will be banana bread tomorrow.

And when it comes time to slice up and share that banana bread, momonomics agrees with economics. You cut it up, but your brother gets to pick his slice first. (Momonomics comports to some degree with Rawlsian political philosophy). And don’t forget to wrap the leftovers in foil.

There’s a more serious point behind all this silliness. People who don’t know any technical economics use economic and momonomic ways of thinking every day to make decisions, both large and small. Lenore Skenazy is doing an excellent job of demonstrating the good things that can happen when moms start thinking about risk and uncertainty the way that economists do. And economists in classrooms everywhere are using momonomics examples to clarify arcane principles and connect economics to their students’ lives.

We would all make better decisions if moms thought more about economics and economists thought more about moms.


Supreme Court rejects binational-marriage plea

(U.S. NEWS & WORLD REPORT) The U.S. Supreme Court ruled Monday against strengthening marriage rights for binational couples who wish to live together in the United States.

Justices found in Kerry v. Din that naturalized U.S. citizen Fauzia Din cannot force greater explanation about or overturn in court the rejection of her Afghan husband Kanishka Berashk’s visa application.

The couple married in 2006. A year later, Din became an American citizen and Berashk requested a U.S. visa to join her. But his prior work in the Taliban-controlled government of Afghanistan apparently derailed the plan.


HUD spends big bucks on worker relocations


Housing and Urban Development employees have generous relocation benefits, thanks to taxpayers.

Taxpayers have shelled out about $2.9 million to pay the relocation costs of 125 Housing and Urban Development workers since 2013, a Politico analysis found.

And that’s just a little more than half of what HUD set aside for relocation expenses for workers during that time frame.

Politico, via a Freedom of Information Act request, discovered the agency reserved $5.5 million for the relocation costs of its employees – including money for storage, airline tickets and even home sales’ offsets so transferring workers wouldn’t lose money on mortgages they held that were worth more than market values.

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The $2.9 million in 2013 figures out to about $23,000 in moving costs per person, Politico said.

“When the taxpayers look at this they see the dysfunction of the federal government in very stark relief,” said Leslie Paige, the vice president of policy for Citizens Against Government Waste, in Politico.

HUD Secretary Julian Castro is generally regarded as a rising Democratic Party star, and potential vice presidential running mate for presidential hopeful Hillary Clinton. He actually refused a $14,000 relocation subsidy by HUD for himself, calling it too generous.

“I said, ‘I don’t need that,’” Castro said to Politico at the time, in reference to HUD’s money offer to only “hold our stuff for one or two nights somewhere.”

Still, Republicans have been targeting HUD’s annual $50 billion budget for cuts, fueled in part by various taxpayer watchdog reports.

“When you look at some real estate expenses, you have to question how these are justified,” said Steve Ellis, vice president of Taxpayers for Common Sense, Politico reported. “In the constrained fiscal climate created by the budget caps, every agency must evaluate their spending decisions.”



Fake black activist’s ‘hate crime’ cases suspended

(Gateway Pundit) Spokane police suspended all reported hate crimes against fake black activists Rachel Dolezal on Friday. Investigators said the controversial letters did not have a post office stamp or barcode and therefore were most likely placed into the box by someone with a key.

It’s time to cut through the left’s nonsense on race relations and race politics: “Negrophilia: From Slave Block to Pedestal – America’s Racial Obsession.”

Rachel Dolezal said she was disappointed the investigation did not produce any arrests.

She told KXLY News, “As a mother of two black sons I would never terrorize my children.”


Huge sections of California sinking due to drought

(Curbed) California’s epic statewide drought has lead to mandatory water restrictions and a new state pastime, droughtshaming, but less-discussed is the fact that the drought is SINKING THE STATE.

The Center for Investigative Reporting looked into just how bad the sinking has gotten and found that there’s not a lot being done to monitor the phenomenon at a statewide level, and equally little money being put toward studying it, despite the fact that it’s causing infrastructural problems across California and will continue to do so. CIR also found that key elements for studying the dangerously accelerated sinking of the state aren’t accessible to scientists because “California allows agriculture businesses to keep crucial parts of their operations secret.”

The cause of the sinking is known, and it’s happened in California before. Once, it was even as bad as geologists think it might be now. Back then, it took more than $1 billion just to repair some of the damage.


Nanoaggressions: Testing the Limits of Libertarian Legal Doctrine

By Robert P. Murphy

Arthur Firstenberg sued his neighbor over a WiFi connection. Firstenberg asked for more than $1 million in damages due to the radiation emanating from his neighbor’s wireless router, dimmer switches, and other devices that we take for granted nowadays.

Free-market economist Steven Landsburg argues that Firstenberg’s case shows the weakness in the standard libertarian approach to property rights, but he confesses that he doesn’t have a fully satisfactory legal doctrine to suggest instead.

Landsburg is fighting a straw man. Libertarians have nothing to fear from the Firstenberg case.

First of all, Murray Rothbard himself showed the proper way to dismiss such lawsuits, as we’ll see shortly. But even if judges adopted Firstenberg’s “absurd” views — namely, that he had the right to be free from photons from outsiders on his own property — the members of a free market community could quickly bargain around this (apparent) absurdity and reach a sensible outcome.

Reductio ad straw man

Here is Landsburg’s analysis:

This case is about as good as it gets if you’re looking for a reductio ad absurdum to libertarian dogma about the absolute right to control one’s own body. If we accepted that dogma, Mr. Firstenberg would have an excellent case. More than one economist has tried to refute the libertarian position by concocting hypothetical lawsuits over “penetration by photons”. Thanks to Mr. Firstenberg, we no longer have to resort to the hypothetical.

Landsburg is no doubt alluding to David Friedman, who — with his training in physics — has come up with clever thought experiments to show the limits of conventional libertarian legal analysis. For example, in “Natural Rights + ?” Friedman writes,

One problem with the version of libertarianism exemplified by Rand, Rothbard, and their followers is its lack of any logical foundation sufficient to persuade the unbeliever of its strong claims…. And another is that, taken literally, it sometimes gives the wrong answer: I cannot turn on the lights in my house without prior permission from every landowner whose ability to see them demonstrates that my photons are trespassing on his property.

Both Landsburg and Friedman are recoiling against (what they perceive to be) a dogmatic libertarianism in the approach to property rights. The primary work in this tradition is The Ethics of Liberty, in which Rothbard starts from first principles and deduces at least the broad outline of what the law code would look like in a free society. Beyond other possible objections to this approach, Landsburg and Friedman think it self-evidently leads to “the wrong answer” on what we might deem a nanoaggression — namely, sending a physically harmless amount of photons onto another person’s property.

I have two lines of response to the Landsburg/Friedman critique. First, I am not certain that the “absolutist” approach to property rights does entail the absurdities that they claim. Rothbard dealt with exactly this problem in “Law, Property Rights, and Air Pollution.” Here is his solution:

Consider the case of radio waves, which is a crossing of other people’s boundaries that is invisible and insensible in every way to the property owner. We are all bombarded by radio waves that cross our properties without our knowledge or consent. Are they invasive and should they therefore be illegal, now that we have scientific devices to detect such waves? Are we then to outlaw all radio transmission? And if not, why not?

The reason why not is that these boundary crossings do not interfere with anyone’s exclusive possession, use or enjoyment of their property. They are invisible, cannot be detected by man’s senses, and do no harm. They are therefore not really invasions of property, for we must refine our concept of invasion to mean not just boundary crossing, but boundary crossings that in some way interfere with the owner’s use or enjoyment of this property. What counts is whether the senses of the property owner are interfered with.

But suppose it is later discovered that radio waves are harmful, that they cause cancer or some other illness? Then they would be interfering with the use of the property in one’s person and should be illegal and enjoined, provided of course that this proof of harm and the causal connection between the specific invaders and specific victims are established beyond a reasonable doubt. (emphasis added)

I hasten to add that Rothbard’s analysis was not ad hoc, a desperate attempt to rescue his system from the corner into which he had painted himself. No, before bringing up radio waves, Rothbard had developed the principles of strict liability, strict causality, the burden of proof, procedural rules, and the crucial distinction between trespass and a nuisance. Moreover, Rothbard quoted from legal scholars throughout his discussion; this was not mere armchair pontificating.

Living with absolutism

Let’s move on to my second line of defense. Suppose that Rothbard misunderstood the implications of his own approach, and that Landsburg/Friedman are right. Specifically, suppose that judges who adopt a strict property rights framework would have to agree that people have the absolute right to be free from photons emitted from others. When an odd fellow like Arthur Firstenberg sues his neighbor, the judge can’t simply dismiss the case as being silly.

Then what? Landsburg and Friedman seem to think they’ve proven their point, but let’s push it. What happens in such a world? Does everyone commit suicide to avoid going to prison?

No, that’s not what would happen. Firstenberg would (by stipulation) get the judge to issue an injunction against his neighbor; she would have to stop emitting photons onto Firstenberg’s property. One problem right away is this: it is physically impossible for her to comply with the injunction, and even if the sheriff comes and puts her in jail, shucks, she is still (however weakly) “invading” Firstenberg’s property — for example, by exerting a slight gravitational force on his couch — because her body has mass. Even if the authorities give her the electric chair, her dead body will invade poor Firstenberg’s property. (Plus, the electrocution itself would send even more electromagnetic radiation his way; the guy can’t catch a break.)

There’s another twist. If her lawyer is clever, Firstenberg’s neighbor will file a countersuit, pointing out that he is invading her property with all of his photons. I don’t know what the legal precedent is, but I could imagine an “absolute property rights” judge ruling that you can’t use the power of law to stop someone from committing an invasion that you yourself are constantly reciprocating.

The real solution to these silly brainteasers is that people would come to contractual agreements to avoid such messes. In the modern world, few people ever stumble upon truly virgin territory that they must homestead. On the contrary, just about everyone rents an apartment or buys land from a previous owner. The builders of a new housing development, or the owners of a new apartment high rise, could have clauses in their agreements explaining the rules that the new buyers or tenants must endorse. Right now, in the real world, people buying a new house may have to agree to the rules of a homeowners association, which sets limits, for example, on how loud they can play music at 2:00 a.m., or whether people in the development are allowed to put political campaign signs on their front lawns. To impose such rules isn’t to limit property rights; it merely clarifies exactly which rights the new buyers obtain with their purchase.

Why we need legal theory

Human interactions will always be messy and unpredictable, which is why we will always need judges to issue opinions on particular conflicts. However, it is still worthwhile for legal theorists to write treatises and essays advocating particular philosophies that judges may wish to adopt when making their decisions.

Contrary to the claims of Landsburg and Friedman, modern physics doesn’t provide obstacles to the application of strict property rights. Rothbard dealt with the problem of harmless nuisance in his famous legal essay, and the market process itself would contract around any remaining bottlenecks.

To suppose that WiFi connections could cripple a free society is a bit like a socialist worrying that free labor markets might lead to starvation: What if nobody wants to be a farmer?


Inside the Mind of the Man Who Could Be Bitcoin’s Creator

By Max Borders

In political science terms medieval Iceland has been called an “anarchy,” but it is more realistic to describe it as a very peer-to-peer kind of government. — Nick Szabo

Many observers think Nick Szabo is the pseudonymous Satoshi Nakamoto, creator of Bitcoin. Szabo, you see, is a coding wizard who had already created an earlier digital currency called “bitgold.” Could bitgold have been a practice run?

What’s more interesting is that Szabo has written extensively on the history of law. In particular, he writes about Anglo-Saxon emergent law, which collided eventually with the “master-servant” law of Justinian’s Rome. And Szabo argues that what we have today in the United States is but the shrinking vestige of common law operating within a growing body of Byzantine statutes.

All this might sound esoteric, but it has profound implications for cryptocurrencies, smart contracts, digital property titles, dispute resolution, and other potential applications of the blockchain at the heart of bitcoin — especially if Szabo is, in fact, the developer who set about writing source code for peer-to-peer law.

Szabo wrote in 2006,

Here’s my paper on private jurisdiction in English history. Franchise jurisdiction played a crucial but unheralded role in the history of English law and politics. Some private jurisdictions existed in Anglo-Saxon times but they grew in importance in the Norman and Angevin periods, and in the corporate form remained an important part of the British Empire until the 20th century.

A franchise, such as a corporation, a jurisdiction, or a right to collect certain tolls or taxes, was a kind of property: an “incorporeal hereditament.” English property law was very flexible; as a result franchise jurisdictions came in a wide variety of forms.

One can see how Szabo would have appreciated that flexibility as a developer.

Of course, some of these aspects of the common law (law by many) are still with us, but they have been overtaken in many quarters by edict (law by one) or especially by statute (law by few).

So what happened?

The Anglo-Norman legal idea of jurisdiction as property and peer-to-peer government clashed with ideas derived from the Roman Empire, via the text of Justinian’s legal code and its elaboration in European universities, of sovereignty and totalitarian rule via a master-servant or delegation hierarchy. By the 20th century, the Roman idea of hierarchical jurisdiction had largely won, especially in political science where government is often defined on neo-Roman terms as “sovereign” and “a monopoly of force.”

Indeed, as I wrote in “The End of Politics,”

Once-great empires soon grew up amid the detritus of war. The clan-king became a god-king. The administration of empire required more layers of hierarchy, which meant delegating power to satraps and governors. The emperor would issue commands to subordinates and those commands would be carried out by those on down the chains of command. Patronage relationships became the norm. The order of man lording power over man took on religious dimensions. Values such as loyalty, honor, obedience, and patriotism firmed up the hierarchy, and without such values, the structure could be weakened either from internal dissent or from better organized enemies.

Hierarchy became more elaborate over time as each layer was added, and hierarchy persisted, apparently, as humanity’s dominant social technology.

This militaristic law is so ingrained in our understanding now that it’s difficult for most of us to imagine life outside of it. Our understanding is of wise stewards minding the upper echelons of statecraft, while the rest of us team and hustle in the relatively peaceful interstices the regulatory state provides for us. It’s hard to conceive of alternative forms of governance and law doing better, and when people drop the A word with respect to these alternative forms, people can’t get past their own connotations.

Most of us have been thoroughly inculcated with this Hobbesian rationale. For example, just in debates among classical liberals, there are those convinced that persistent peace requires a final arbiter — one whose final word quashes conflict and whose law is made absolute through enforcement. And when it comes to alternatives, our failure of imagination has given rise to some of the most predatory regimes in history. As Szabo writes,

Our experience with totalitarianism of the 19th and 20th centuries, inspired and enabled by the Roman-derived procedural law and accompanying political structure (and including Napoleon, the Csars, the Kaisers, Communist despots, the Fascists, and the National Socialists), as well as the rise of vast and often oppressive bureaucracies in the “democratic” countries, should cause us to reconsider our commitment to government via master-servant (in modern terms, employer-employee) hierarchy, which is much better suited to military organization than to legal organization.

Indeed, we should reconsider our unreflective commitment to such hierarchies, because law and society are not only possible without them, but could be more robust, peaceful, and prosperous without them. But how do we move beyond those hierarchies?

The person who designed the basic protocols of the blockchain understood the power of “dumb networks” as opposed to Byzantine codes. As Szabo writes,

Fortunately, franchise jurisdiction has left permanent influences on modern governments, including on the republican form of government in general and the United States Constitution, federalism, and procedural rights in particular. It also left a record of a wide variety of forms of law and government that can provide us with alternatives to the vast employee hierarchies wielding coercive powers that have given rise to modern oppression.

Likewise, the inventor of bitcoin is helping us imagine a different sort of world. I wrote the following in part two of “The End of Politics”:

The architecture of the Web has already shown the world what’s possible in terms of upgrading our democratic operating system (DOS). This is true both in the sense that our new social technologies are like our online technologies, and in the sense that our online technologies enable new social technologies to emerge. Little platoons are already emerging on the spine of the blockchain, for example. And just as Lyft and Uber are showing taxi cartels how it’s done (or as Kickstarter is showing the NEA how it’s done, or as Bitcoin is showing the Federal Reserve how it’s done) new parallel governance structures will soon show State hierarchies around the world how it’s done.

What might the world look like when this process is further along? It’s hard to predict. But the network architectures show the way.

All of this was my rather roundabout way of saying that we’re already weaving together new law and using it, without permission.

Echoing legal scholar Bruce Benson’s Enterprise of Law, writer and venture fund manager Michael Gibson leaves us with an even brighter glimpse of the future in “The Nakamoto Consensus”:

It turns out there’s only one thing that guarantees production of good laws. The people bound by the laws have to agree to be bound by them. Not hypothetically or tacitly, as in some imaginary will of the people or behind a veil of ignorance. Consent must be real, transparent, and continuous. No law can bind a single person unless that person consents to be bound by that law. All laws must be strictly opt in. Lawmakers could be saints, devils or monkeys on typewriters — doesn’t matter. The opt out–opt in system lets only good laws survive. Bad laws are driven out of production.

Bad laws can only inflict harm and destroy wealth up to the cost to opt out of them. We can underthrow the state one contract at a time.

This single insight — articulated so well by Gibson — is what surely informed Nick Szabo and inspired Satoshi Nakamoto.

But if the “underthrow“ of Leviathan lies ahead, it will be thanks not only to encryption technology but also to understanding the beauty, flexibility, and robustness of emergent law. Smaller jurisdictions created by forking the code or by allowing people to vote with their boats are enough to reduce the costs of exit.

Szabo writes,

The overall goal of Juristopia is to improve the most important functions of government (especially defense and the abatement of public nuisances) while preventing the corruption, oppression, war, genocide, and other abuses that have so often come with police powers and taxation. Those evils have been particularly prone to occur when those powers are bundled into a locus of sovereignty, a la the personal totalitarianism of the Justinian Code, Bodin, and Hobbes or the parliamentary totalitarianism of Bagehot. These traditions of legal procedure, assuming political relationships are a matter of delegation rather than of property, have given us almost all of the worst in Western history: the Caesars, the Tsars, Napoleon, the Kaisers, the communist dictators, Mussolini, Franco, and Hitler among others — based on the profoundly false and destructive assumption, derived from the legal procedure of the Roman Empire, that there must be “one person” who is “responsible” for all politics and law — a person or (for Bagehot) small organization sitting at the top of a vast pyramid of principal-agent, usually boss-employee, relationships.

Although it discards totalitarian political structure and legal procedure, our proposed form of government is based on historically proven legal mechanisms. With the clarity of legal procedure it avoids the vague nonsense that often passes for political philosophy. Much of the political structure of Juristopia is based on highly evolved common law mechanisms such as property and contract, but these are used in the same basic manner as in the common law, rather than as misleading analogies or mere labels.

Let’s hope this process unfolds before the hierarchies grow too authoritarian in response.

Whether Nick Szabo is Satoshi Nakamoto I cannot say. But at the very least, Szabo was part of a community from which Nakamoto drew knowledge and inspiration. And that community was built on great ideas that are finally being given expression in ones and zeros.