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More broadly, you can’t go wrong with Tyler Cowen‘s In Praise of Commercial Culture, which tackles the high-low culture divide in an early chapter, and which shows how markets generate tons of creative output. It’s his masterpiece, in my opinion (as one of his Ph.D. students, maybe that opinion counts?). Also of course, read everything by Virginia Postrel, backwards from The Power of Glamour, to The Substance of Style, to The Future and its Enemies. She has a book on textiles coming out at some point, too.

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This issue’s lead story is a profile of manufacturing in WNC. While the region enjoys a stellar reputation as a tourist destination and maker of craft and artisanal goods (anyone care for a tasty beverage?), lots of folks will be surprised to learn how heavily the region depends on manufacturing. This surprise comes from everyone knowing that the days of big textile and big furniture are long gone. Is anything “being made in” WNC anymore?

In a word, heck yeah. In fact, manufacturing output is still the leading sector in the Western counties ($5.7 billion, or 21.0% of total WNC output), as it is statewide ($103 billion, or 19.8% of state output). And after almost all sectors declined badly during the Great Recession, manufacturing has been the fastest growing sector in WNC over the last decade, now matching pre-Great Recession levels in Buncombe County (Asheville). Taking all 13 Western counties together, manufacturing growth has been much faster (39% since Great Recession) than it has been statewide (22.7% over the last decade). Total compensation to manufacturing workers has increased 21% over than same period. This is happening as the number of jobs in manufacturing has declined. So, while the WNC manufacturing economy is small (about 5%) compared to the rest of the state, it’s been growing faster than in the rest of the state and is the biggest part of the WNC economy.

Again, it is perhaps easy to overlook how important manufacturing is to the WNC economy. Headlines focus on the decline of manufacturing jobs and abandoned union buildings. This is understandable. But equally importantly, although perhaps not as newsworthy, is the reality that WNC manufacturers have been producing a lot more value in recent years, and they’ve been doing so with fewer workers.

Along with this tale comes other realities. The fact is, manufacturing in WNC is becoming more globally competitive, environmentally cleaner, more technology-driven, and more knowledge-based. Asheville denizens, who are prone to bicker about outsiders and anything large in scale, should embrace our growing economy. We should embrace our role as an increasingly globally-connected economy. And we should embrace our role as the economic hub for the greater WNC region. Asheville sits at the cross of two important interstate highways, and as the entry point from lower elevations to the south and east, it is the main connector between the Charlotte-Atlanta corridor and populations to the north and west of the Southern Appalachians. Tourism and craft? Heck yeah. But manufacturing and trade, heck yeah too.

A closing thought. It’s tempting to think that manufacturing jobs simply go where labor costs are the lowest. Ross Perot nearly won the U.S. presidency on this misconception (remember his “giant sucking sound”?), Donald Trump actually did (along with other peddled misconceptions), and politicians of all stripes continue wielding it to rattle the public’s cautionary stance toward foreign trade. But manufacturing jobs are increasingly high-skilled jobs, and companies want to locate near high-skilled work forces. They’re also willing to match those high skills with high pay. So rather than close ourselves off in xenophobic fret, we should embrace the challenge of remaining economically competitive. This has been the trend in WNC, as elsewhere. It is not without its downsides. But it has many, many upsides that deserve better than the neglect of the public’s cautionary attention.

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In the marketplace of economic ideas, scholars are in the business of crafting arguments, techniques, theorems, policy recommendations, and so forth, all in the hope of exchanging their craft for the currency of readership, praise, influence, and ultimately some prominent place in the body of economic scholarship. Economists act like idea entrepreneurs…

First Look is a place where journals and other research experts identify content of interest prior to publication. It can include a wide range of early stage content types including working papers, proceedings, preprints, accepted papers, and papers under consideration. First Look is a partnership between SSRN and some of the world’s most influential journals to provide rapid, early and open access to evolving scholarly research.

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— Tyler Cowen, George Mason University, blogger at Marginal Revolution, and author of Discover Your Inner Economist

“There’s no shortage of writing about bad government policies, but Leighton and López go several steps deeper, by exploring the incentives that foster bad policies, the institutions that foster bad incentives, the ideas that foster bad institutions, and the social processes that foster the spread of bad ideas. Better yet, they offer wise prescriptions for change and colorful stories to illustrate their wisdom. This is a book that manages all at once to be sage, important, and great fun to read. I highly recommend it.”

— Steven E. Landsburg, Professor of Economics, University of Rochester and author of The Armchair Economist

“Come along with Leighton and López as they speed date significant economic and philosophical influencers and chart the triumph of markets. As an erstwhile political practitioner in radical market reforming mode, I was relieved to find that I could dodge the moniker of ‘madman’ and classify myself as a ‘political entrepreneur.’ Racy and relevant, this book is a call to reforming arms.”

— Honourable Ruth Richardson, former Minister of Finance, New Zealand

“This book is an inspiring reminder that great thinking matters. It’s a delightful, accessible, and thought-provoking book for anyone interested in big ideas at the intersection of economics and politics.”

— Charles Wheelan, University of Chicago and author of Naked Economics: Undressing the Dismal Science

“Leighton and López have written a captivating book that explains the process of social change, from ideas to outcomes. Their theoretical framework—centered on the figure of the ‘political entrepreneur’—is illuminating and original. It will spark productive conversations among those who are interested in social change and the wealth of nations.”

— Giancarlo Ibarguen, Entrepreneur and President of Universidad Francisco Marroquín

“Madmen makes clear there are several necessary conditions for a political shift to take place. We tend to think of change as resulting from a single hero or villain, but the story is more complex. The tales in this book show what it takes to effect change, while weaving a yarn that is entertaining and memorable.”

— Michael C. Munger, Duke University and author of Analyzing Policy

“Madmen is a rare treat—and a rare feat. Seldom does a work combine the rigors of academic inquiry with the delights of a successful storytelling enterprise. The principles of “political change,” as it turns out, can explain human behavior in the body politic, in sports, in decisions of daily life, in financial markets, and naturally in the complex field of structural reform. This book is required reading for people focusing on the dynamics of political transformation; it is also a splendid read in itself.”

— Dr. Roberto Salinas León, President, Mexico Business Forum

“Leighton and López supply intellectually sound arguments, grounded in public choice and Austrian economics, to explain why democratic governments often fail to produce policies that are consistent with the public’s interest. Most impressive are the authors’ evident grasp of—and ability to synthesize—complex arguments about the properties of ‘good government.”

— William F. Shughart II, Utah State University and co-author of Policy Challenges and Political Responses

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Recently I was asked to submit a file for the Liberal Studies Teaching Award. The LS program is the core of WCU’s curriculum. There is a list of classes across most of the disciplines on campus (although it’s heavy on humanities). And there’s a faculty committee separate from the regular curriculum committees that oversees the program. I teach two LS courses a semester, including my upper-level Ethics of Capitalism class.

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The first major startup to successfully compete against AT&T was MCI. The story was usefully told in 1986 by Larry Kahaner in his On the Line: The Men of MCI Who Took On AT&T, Risked Everything and Won! MCI was founded by Jack Goeken, who arguably was more inventor/engineer, than he was entrepreneur. Beyond the very earliest days, the dominant agent in the growth of MCI was Bill McGowan, some of whose successes show him to have been an able political entrepreneur.

Goeken had founded MCI using microwave relays to send voice messages between Chicago and St. Louis. Rather than simply grow the MCI that Goeken had founded, which would have made sense in terms of economies of scale, McGowan set up several separate little local MCIs, each financed by local investors (Kahaner 1986, p. 58). The FCC was committed to localism in awarding radio and TV licenses, and McGowan, as political entrepreneur, saw this decentralized structure as a way to win approval from the FCC.

When McGowan eventually sought to extend MCI’s service to Europe, he faced the formidable Conference of European Postal and Telecommunications Administrations (CEPT) whose 34 nations had jointly agreed that none of them would strike a deal with independent voice carriers (Kahaner 1986, pp. 218-219). McGowan’s most effective point man in the effort was Seth Blumenfeld, who realized that the nations of CEPT did not trust each other, and who sought the weakest link that might be convinced to ignore the CEPT agreement. He eventually focused on Belgium, one of the smaller nations in CEPT, that had less in common with the other nations, and that had a reputation for decisions based on good economics, rather than bad crony relationships. MCI offered Belgium modest payments per minute for communications routed to Europe through Belgium. Belgium agreed.

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Mario Rizzo draws on his decade-plus of work with Glen Whitman to deliver this same point with greater subtlety.

It is one thing to construct clever experiments in which people do “odd” (unexpected by the standard paradigm) things. It is another to show that they engage in behavior in the real world that is ecologically inappropriate or that leads to self-defeating behavior. “Odd” behavior should be viewed as an invitation to probe more deeply rather than to condemn. Explanation is hard; evaluation can be easy and cheap.

Even among economists, there is much dissent. Look at the work of Vernon Smith, another Nobel laureate in economics, whose experimental economics has pushed us into a recognition that the errors or imperfections of individual decisionmaking need not result is poor outcomes — if the institutional structure is good. Smith has carried on the tradition of the Scottish Enlightenment which emphasized time and again the compatibility of imperfect men and outcomes that embody far more “intelligence” than any of them have as individuals.

Niclas Beggren complements this in his systematic survey of the literature, “Time for Behavioral Political Economy?” (2012 Review of Austrian Economics):

There is so much more to Thaler’s work than the set of nudge policy implications. The inimitable Alex Tabbarok [here] and Tyler Cowen [here] provide breadth and depth of introduction.

My own contribution to this areas of work tests for one particular behavioral “anomaly”, endowment effects, in the context of the most common public goods experiment environment, namely the voluntary contribution mechanism. Available here.

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At first I became a little surprised when they started dropping an occasional “bullshit” or “fuck” in addition to my seemingly innocuous “hells” and “damns”. My naivety wore off when I internalized the fact that, at least in the little micro society of my class, I am a leader. And people will follow my lead. So I quickly stopped cussing in the classroom, and ever since I’ve consciously tried to keep an elevated and respectful tone, one where students can be productive and decent with one another.

Our Whatever-in-Chief needs to learn this lesson, because like it or not people follow his lead, and his words are degrading our society. 

This blog grew out of Wayne’s and my 2013 book, Madmen, Intellectuals, and Academic Scribblers. In that book we take seriously the effect that ideas have on social institutions. Words matter. Words of leaders especially matter. And when their words are unfitting of their leadership positions, they make themselves unfit for those positions.

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“The fact that this book has won two prestigious prizes raises a question: does evidence count anymore in history?”

http://people.hss.caltech.edu/~kousser/book%20reviews/maclean.pdf

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