Where I differ from Bryan Caplan’s *Labor Econ Versus the World*

One thing I liked about reading this book is I was able to narrow down my disagreements with Bryan to a smaller number of dimensions.  And to be clear, I agree with a great deal of what is in this book, but that does not make for an interesting blog post.  So let’s focus on where we differ.  One point of disagreement surfaces when Bryan writes:

Tenet #6: Racial and gender discrimination remains a serious problem, and without government regulation, would still be rampant.

Critique: Unless government requires discrimination, market forces make it a marginal issue at most.  Large group differences persist because groups differ largely in productivity.

I would instead stress that most of the inequity occurs upstream of labor markets, through the medium of culture.  It is simply much harder to be born in the ghetto!  I am fine with not calling this “discrimination,” and indeed I do not myself use the word that way.  Still, it is a significant inequity, and it is at least an important a lesson about labor markets as what Bryan presents to you.

But you won’t find much consideration of it in Bryan’s book.  The real problems in labor markets arise when “the cultural upstream” intersects with other social institutions in problematic ways.  To give a simple example, Princeton kept Jews out for a long time, and that was not because of the government.  Or Princeton voted to admit women only in 1969, again not the government.  What about Major League Baseball before Jackie Robinson or even for a long while after?  Much of Jim Crow was governmental, but so much of it wasn’t.  There are many such examples, and I don’t see that Bryan deals with them.  And they have materially affected both people’s lives and their labor market histories, covering many millions of lives, arguably billions.

Or, the Indian government takes some steps to remedy caste inequalities, but fundamentally the caste system remains, for whatever reasons.  Again, this kind of cultural upstream isn’t much on Bryan’s radar screen.  (I have another theory that this neglect of culture is because of Bryan’s unusual theory of free will, through which moral blame has to be assigned to individual choosers, but that will have to wait for another day!)

We can go beyond the discrimination topic and still see that Bryan is not paying enough attention to what is upstream of labor markets, or to how culture shapes human decisions.

Bryan for instance advocates open borders (for all countries?).  I think that would be cultural and political suicide, most of all for smaller countries, but for the United States too.  You would get fascism first, if anything.  I do however favor boosting (pre-Covid) immigration flows into the United States by something like 3x.  So in the broader scheme of things I am very pro-immigration.  I just think there are cultural limits to what a polity can absorb at what speed.

If you consider Bryan on education, he believes most of higher education is signaling.  In contrast, I see higher education as giving its recipients the proper cultural background to participate in labor markets at higher productivity levels.  I once wrote an extensive blog post on this.  That is how higher education can be productive, while most of your classes seem like a waste of time.

On poverty, Bryan puts forward a formula of a) finish high school, b) get a full time job, and c) get married before you have children.  All good advice!  But I find that to be nearly tautologous as an explanation of poverty.  To me, the deeper and more important is why so many cultures have evolved to make those apparent “no brainer” choices so difficult for so many individuals.  Again, I think Bryan is neglecting the cultural factors upstream of labor markets and in this case also marriage markets.  One simple question is why some cultures don’t produce enough men worth marrying, but that is hardly the only issue on the table here.

More generally, I believe that once you incorporate these messy “cultural upstream” issues, much of labor economics becomes more complicated than Bryan wishes to acknowledge.  Much more complicated.

I should stress that Bryan’s book is nonetheless a very good way to learn economic reasoning, and a wonderful tonic against a lot of the self-righteous, thoughtless mood affiliation you will see on labor markets, even coming from professional economists.

I will remind that you can buy Bryan’s book here, and at a very favorable price point.


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