Science
**The Answer Is Transaction Costs – Michael Munger**

“The real price of everything is the toil and trouble of acquiring it.” -Adam Smith (WoN, Bk I, Chapter 5)
In which the Knower of Important Things shows how transaction costs explain literally everything. Plus TWEJ, and answers to letters.If YOU have questions, submit them to our email at taitc.email@gmail.com There are two kinds of episodes here: 1. For the most part, episodes June-August are weekly, short (20 mins), and address a few topics. 2. Episodes September-May are longer (1 hour), and monthly, with an interview with a guest.Finally, a quick note: This podcast is NOT for Stacy Hockett. He wanted you to know that…..

Latest Episodes:

Price Gouging or Price Information? Aug 20, 2024

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Can high prices during emergencies actually save lives? Using North Carolina as an example, we dissect the economic and legal implications of these laws, exploring the ambiguities in terms like "unreasonably excessive" and the chilling effect on commerce. Discover how artificially low prices can lead to resource misallocation, discourage stockpiling, and hinder the transportation of vital supplies during crises. Allowing higher prices is, perhaps surprisingly, the only way to get low prices soon.
Links on Price Gouging:
Videos:

Articles:

Book o'da Week: https://www.simonandschuster.com/books/What-Went-Wrong-with-Capitalism/Ruchir-Sharma/9781668008263

If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

You can follow Mike Munger on Twitter at @mungowitz

All Housing is Affordable Housing Aug 13, 2024

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Are housing regulations making affordable homes a pipe dream? We promise you'll gain a deeper understanding of how transaction costs and regulatory hurdles impede new housing development, frustrating both market responses and the dreams of potential homeowners. We'll explore how the very laws intended to protect affordable housing often backfire, pushing developers toward luxury projects instead.

Vicki Been; Ingrid Gould Ellen; Katherine O’Regan, 2018. "Supply Skepticism," https://furmancenter.org/research/publication/supply-skepticismnbsp-housing-supply-and-affordability
Michael Munger, "All Housing is Affordable Housing: Seen and Unseen Edition." AIER.
Credit to Biden/Harris: Trying to Make It Legal to Build Housing: https://www.whitehouse.gov/briefing-room/statements-releases/2024/08/13/fact-sheet-biden-harris-administration-takes-new-actions-to-lower-housing-costs-by-cutting-red-tape-to-build-more-housing/
Building "luxury" housing reduces rents on lower-cost units! https://x.com/jayparsons/status/1823352715852103697
Javier Milei Got Rid of Rent Control: Housing Supply Skyrocketed!Q https://www.newsweek.com/javier-milei-rent-control-argentina-us-election-kamala-harris-housing-affordability-1938127

Cans v. Bottles: https://twinmonkeys.net/an-advantage-to-canning-vs-bottling-lower-shipping-costs/#:~:text=Aluminum%20cans%20are%20cheaper%20to,space%20and%20reducing%20packaging%20waste
The Theban Plays: https://www.amazon.com/Sophocles-Oedipus-Colonus-Antigone-Editions/dp/B00HTJUCLW/ref=monarch_sidesheet_title

If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

You can follow Mike Munger on Twitter at @mungowitz

We Get Letters! Aug 06, 2024

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What is it that beach parking lots are actually selling? Why do beer bottles cost more than cans? And just what are costs of the thing, as opposed to the costs of selling or buying the thing? Can you really separate them out?

Mass MOCA: "Wilco's Solid Sound" Music Festival https://massmoca.org/event/solid-sound-2024/
"To Consumers, ALL Costs are Transaction Costs." AIER, by Michael Munger. https://www.aier.org/article/to-consumers-all-costs-are-transaction-costs/
Yogi Berra "quotes" (mostly attributed, rather than actual). https://businesscoachingofpa.com/top-100-classic-yogi-berra-quotes/

Book o'da'week: Dealers of Lightning: Xerox PARC and the Dawn of the Computer Age Kindle Edition Michael A. Hiltzik, 2009, Harper-Collins. https://www.amazon.com/Dealers-Lightning-Xerox-PARC-Computer/dp/0887309895

If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

You can follow Mike Munger on Twitter at @mungowitz

Shibumi! Legit Idea, or Shady Dealings? Jul 30, 2024

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You can throw shade, but can you own the idea of shade? Shibumi's sunshade has become an essential part of the coastal landscape, but that has sparked some fierce legal battles. We'll talk patents, beginning with the evolution of shade solutions from caveman ingenuity to Shibumi's wind-powered marvel. Plus, you'll get the inside scoop on the recent lawsuit where Shibumi defended its designs against Beach Shade LLC, demonstrating the high stakes of protecting intellectual property in today's competitive markets.
But the beach isn't the only place optimization matters. Ever wondered the optimal way to board a plane or fund your education? We dive into the secrets behind efficient airline boarding procedures and the real-world challenges that complicate them. Then, we shift to a heated debate on Income Share Agreements (ISAs) versus traditional student loans, exploring their unique benefits and drawbacks. Get ready to question everything you thought you knew about intellectual property as we discuss Boldrin and Levine's controversial views on innovation and competition.
Links and Resources:
Shibumi:

Description of Shibumi v. Beach Shade: https://www.finnegan.com/en/insights/articles/southeast-litigation-update-december-2023.html
Primary Shibumi Patent, Granted January 2019: https://portal.unifiedpatents.com/patents/patent/US-10190330-B2
List of Patents, From Shibumi Web Site: https://shibumishade.com/pages/patents
The Assembly--"Shibumi Has Taken Over NC Beaches" https://www.theassemblync.com/business/shibumi-shade-takes-over-north-carolina-beaches/

ISA's: https://fsapartners.ed.gov/knowledge-center/library/electronic-announcements/2022-03-02/income-share-agreements-and-private-education-loan-requirements

Michele Boldrin on IP, on Econtalk: https://www.econtalk.org/boldrin-on-intellectual-property/

If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

You can follow Mike Munger on Twitter at @mungowitz

Slavery, Indentured Servitude, and the Problem of Financing Education Jul 23, 2024

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Not everyone realizes that the modern financial system has enabled us to end historical practices such as indentured servitude and apprenticeship. This episode uncovers how financial systems tackled market failures and transaction costs, drawing on insights from Jeffrey Hodgson's "The Wealth of a Nation: Institutional Foundations of English Capitalism." We'll explore the evolution of borrowing against future earnings and how modern financial institutions have streamlined processes that once resembled slavery, fostering the growth of capitalism.
We'll then shift gears to examine Glenn Lowry's groundbreaking views on educational investment, discussed in his book "Late Admissions" and echoed in his 1981 Econometrica paper. Lowry's exploration of intergenerational transfers and parental investments in education reveals significant inefficiencies in the current system, drawing parallels with Michael Hudson's analysis of financial markets. The conversation sheds light on the untapped potential of underprivileged children and the need for better financial instruments to optimize educational funding.

Geoffrey Hodgson. The Wealth of a Nation: Institutional Foundations of English Capitalism. Princeton University Press. https://press.princeton.edu/books/hardcover/9780691247014/the-wealth-of-a-nation
Glenn Loury, (1981). Intergenerational Transfers and the Distribution of Earnings. Econometrica, 49(4), 843–867. https://doi.org/10.2307/1912506
What Causes Capitalism? STEPHEN DAVIES. REASON. https://reason.com/?p=8285302
Nick Gillespie Interviews Glenn Loury, REASON, https://reason.com/podcast/2024/06/12/glenn-loury-tales-of-sex-drugs-and-capitalism/

If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

You can follow Mike Munger on Twitter at @mungowitz

Bees, Oranges, and Externalities: The Answer is Transaction Costs Jul 16, 2024

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Bees and Valencia oranges from my family's farm in rural central Florida provide a snapshot of externalities and transaction costs. A local beekeeper wasn't just a boon for our crops but also an illustration of Arthur Pigou's theories on the divergence between supply price and marginal supply price.
Real-world practices, such as apple orchard owners paying for pollination services while beekeepers pay for the privilege of orange blossom honey, reveal how market dynamics naturally balance costs and benefits.

M.C. Munger. "The Lighthouse Myth." https://www.aier.org/article/the-lighthouse-myth/
M.C. Munger. "Orange Blossom Special." https://www.econlib.org/library/Columns/y2008/Mungerbees.html
J.E. Meade, 1952, "External Economies and Diseconomies in a Competitive Situation." https://www.jstor.org/stable/2227173
Shawn Regan, "How Capitalism Saved the Bees", PERC. https://www.perc.org/2017/07/20/how-capitalism-saved-the-bees/
SNS Cheung, "Fable of the Bees." https://www.pauldeng.com/pdf/stevencheung/fableofbees.pdf
Bruce Frohnen and Ted McAllister, Character in the American Experience: An Unruly People. https://rowman.com/ISBN/9781666914528/Character-in-the-American-Experience-An-Unruly-People

If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

You can follow Mike Munger on Twitter at @mungowitz

Parking Lots, Transaction Costs of the Price Mechanism, and the Pork Pie Fedora Rogue Jul 09, 2024

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Two seemingly similar parking lots at Wrightsville Beach, North Carolina, couldn't be more different in the emergent behaviors they foster. From the orderly lines of the 85-space lot to the chaotic dynamics of the smaller 19-space circular lot, discover how price rationing, queue formation, and transaction costs play critical roles in these everyday systems.
Things take s a quirky turn with the arrival of a man in a pork pie fedora who disrupts these parking norms, buying spaces directly from beachgoers. This unconventional behavior prompts a deeper discussion on the breakdown of social rules and the challenges of maintaining order when outsiders intervene.

Book o'da'week: Jonathan Haidt, The Anxious Generation: How the Great Rewiring of Childhood is Causing an Epidemic of Mental Illness. 2024, Penguin Press.

If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

You can follow Mike Munger on Twitter at @mungowitz

Monkey See, Monkey App! And IP Walks Into a Bar.... Jul 02, 2024

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The method of much of social science is "comparative statics." There's an amazing natura experiment going on, after Hurricane Maria changed the environment for the rhesus macaques of Cayo Santiago. Sometimes, you need a simulation to understand something is only obvious after the fact. These primates, known for their fierce competition and rigid hierarchies, expanded their social networks and reduced aggression to endure the island's new, harsh environment.
Plus, a politically incorrect TWEJ, and an interesting letter.

NYT Cayo Santiago story
A short piece on "anti-market atavisms" and Hayek's insights.
Why you can't get a reservation at a restaurant...
News story about "Monkey App"
Book'o'da week: Peter Boettke, Erwin Dekker, and Chad Van Schoelandt, editors, Toward a Hayekian Theory of Social Change. https://rowman.com/ISBN/9781666937138/Toward-a-Hayekian-Theory-of-Social-Change

If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

You can follow Mike Munger on Twitter at @mungowitz

Baseball, Dollar Dogs, Apple Pie and Transaction Costs Jun 25, 2024

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Why would a baseball stadium limit the number of $1 hot dogs per customer on Dollar Hot Dog Night? Find out as we work on this intriguing question posed by a curious high school student named HJ. Through the lens of transaction costs, we reveal how these promotional events are less about selling hot dogs and more about enhancing the overall (cheap!) game experience to attract new fans. Using a real-life example from a recent Mets game, we explore how such promotions can change the crowd dynamics, boost attendance, and ensure a positive atmosphere for everyone, even when things get a bit rowdy.
And the TWEJ: A dad joke, because of course it is
Three apple pie prices (for one pie!)

Samuel Bagg's book The Dispersion of Power (Oxford)

If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

You can follow Mike Munger on Twitter at @mungowitz

Dam Shame: It's not easy being government Jun 17, 2024

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I have been interested lately in a paper Bill Keech and I were working on a decade ago,
It was called "The Anatomy of Government Failure."
Was AC Pigou the first "Public Choice" theorist?
There are two transaction costs problems in the background:
1. Information asymmetries and the problem of ignorance
2. Incentive problems and institutional design
Market failure is actually a thing. And it can be complicated: Kleinman and Teles, "Market and Non-Market Failures."
But so is government failure. There is no reason to expect government action to be Pareto Optimal.
The problem is that every flaw in consumers is worse in voters!
It could even be argued (I did!) that a "good" industrial policy is impossible in a democracy.
Book o'da week: The Next American Economy: Nation, State, and Markets in an Uncertain World . 2022, Encounter Books. by Samuel Gregg.

If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

You can follow Mike Munger on Twitter at @mungowitz

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The Answer Is Transaction Costs – Michael Munger

If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

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