Juliette Sellgren 

Science is the great antidote to the poison of enthusiasm and superstition. Hi, I'm Juliette Sellgren and this is my podcast, the Great Antidote- named for Adam Smith, brought to you by Liberty Fund. To learn more, visit www Adam Smith works.org.

Welcome back. We've had a lot of conversations about and relating to public choice economics on this podcast- that is the study of politics without romance, but there's more to it than that. I know my earlier conception of public choice was as this strain of economics that stood clearly apart from the rest of it and was easily identifiable. But boy was I wrong. Today on May 10th, 2024, I'm excited to welcome Sandra Peart to the podcast to help us parse through some of the conflicts and disagreements and questions within the public choice schools of thought, particularly the Virginia School, which was housed at the University of Virginia. So I feel very, very good about that even though it has nothing to do with me. Peart is a distinguished professor of leadership studies and the president of the Jepson Scholars Foundation, as well as the co-author of Towards and Economics of Natural Equals: A Documentary History of the Early Virginia School with David Levy. She's a distinguished fellow of the history of economic society. Welcome to the podcast.

Sandra Peart 

Thank you. I'm happy to be here.

Juliette Sellgren 

So to start off something that's not necessarily a Virginia school or public choice related, what is the most important thing that people my age or my generation should know that we don't?

Sandra Peart (1.54)

That's just such a terrific question. I'm going to give you what may seem to be kind of an obvious answer, and it may not even be unique to your generation, but right now, as anyone who works on a college campus knows it's very difficult for students, but also faculty members and people in the general public to talk with people with whom they disagree. And I think it's extremely important that we know how to talk across differences, intellectual and political differences. And it's especially important for people who are studying on college campuses to be able to get along with people with whom they disagree, perhaps have a conversation in which they convince someone of whatever point they're trying to make. But even if it's not a matter of trying to convince someone of what's right or wrong or might be right or wrong, it's important for all of us to be able to, as I say, speak and speak respectfully and perhaps try to persuade someone through discussion. That particular view of human nature, thinking of public choice economists or a particular view of politics is one that should be taken seriously, even if it's not fully endorsed by someone with whom you're having the conversation. So that's what I would say. We need to work on college campuses, but also other places.

Juliette Sellgren (3.40)

Yeah, I agree. I've been thinking a lot recently, especially in light of, we just had a, I would say relatively small bout of protesting at UVA and it's still happened. Police were called all that stuff, but there were professors involved, which I thought was interesting and maybe not. I don't know, maybe that's fine, but in a way, the thing that it stands for, regardless of what we mean when we're talking about what the conflict is, but the thing to me it represents is this, how to put it, it is in a way, this intolerance, this inability to sit down and have a conversation. I think the president of our university actually really pointed this out. He said there have been a lot of efforts surrounding this conflict throughout the school year and the difference between those events and this is that this was not a conversation. And what is so odd to me, and maybe it makes sense, is that professors are involved and they're involved in not having a conversation when I think that that is an essential part of the job description is being able to talk about this.

Sandra Peart (4.58)

Right, right. Yes. And you would think that the professors would be the ones helping students have a civil conversation and sometimes they are. So I don't want to suggest that the professors you've seen are that's the only way the professors are behaving. I think in some instances they're doing really important work in the classroom, helping students have these kinds of conversations. But I think you're right. Once you have a demonstration, then the invitation to speak is not so clear. Although I do think a demonstration is a form of making a point or of discussion. So I wouldn't want to say that students shouldn't be allowed to have demonstrations, although of course there should be rules about how they happen and so on, and they should be nonviolent and so on and shouldn't involve shouting down other people. So that I think it's important to allow a space for conversation even in those circumstances.

But I do find that this is a skill, the skill of conversation that we are in danger of losing, we can speculate about why we're in danger of losing it. There are lots of possible reasons and we don't even have to go to the demonstrations or this really difficult political situation, even in other less conflict fraught situations, it seems to me that we're losing the art of conversation. When I was young, and this was of course a long time ago, my mother, who was very wise, told me that to start a conversation, I should talk about the weather. Sounds like banal advice, but the point she was making and she was a very wise person, is put aside climate change at least at a point in time. No one can be blamed for the weather. So you and I talk about the weather, you like hot weather, I like cold weather. The weather happens to be one of the two of those things. On a particular day we can have a conversation about how I don't like it or you don't like it and nobody is blamed. And I think it's important to have conversations in which there is no blame being assigned. And if you start with those, then you can move to conversations that are more tied into our own identity, our political or ideological identity. And maybe you can move on to those more difficult conversations with less animosity and more respect.

Juliette Sellgren (7.59)

I totally agree, and that's very actionable advice. On the note of the protests, the protesting professors are by far a minority, right? Most professors actually do kind of…

Sandra Peart 

Absolutely.

Juliette Sellgren 

No matter how you criticize 'em, do stand true to this. We function in the classroom, we're meant to learn an insight discussion. And so even though it's not conversation, like we're going to start by talking about the weather, the context allows for maybe a more veiled way to learn these skills, which I think is important. And we forget sometimes, and I do agree that protests are speech and they are a stance, especially if you look back in history, they're not insignificant.

But maybe thinking about history of thought they have made differences, but also maybe using woke against the people. If we're really looking back, the things that are remembered well are the peaceful ones. Think about MLK. Maybe they don't like MLK, I don't know. I'm not going to put words or people or preferences in their mouths. But the ones that generally are viewed well when looking back and that withstand scrutiny are the ones that are peaceful like apartheid in South Africa. Nelson Mandela makes me cry to this day. And that's not for nothing.

Sandra Peart (9.31)

And I would say as well, the ones that are tied to important ideas. So the idea of human dignity, for instance, which underscores Mandela or the idea of basic equality of human nature to think about the underpinnings of some of the public choice economists. And I find having discussions about old texts in which some of these ideas appear can be a way of helping diffuse tension around speaking about a contemporary issue. So I designed a course a while ago just after the housing crisis, that's kind of a while ago now, but I wanted to talk about economic policy, but I didn't in the context of the housing crisis and the great recession, but I didn't want to have use only contemporary articles about what was happening. And instead we read a lot of Adam Smith, for instance, but we read Smith as a way to a discussion about economic policy and banking policy and so on in the years 2008, 2009, and so on.

And it made the course much more fun because students knew they wanted to talk about contemporary issues, but they had something, it wasn't quite actionable, it wasn't a call to action, but something they could sink their teeth into a text that was not politically fraught. It may have been back in 1776 or 1759 when Smith wrote TMS Theory of Moral Sentiments and the Wealth of Nations, but today, not particularly politically fraught, but it gave them something to hang their arguments on so that they weren't just shouting at each other about what they thought the banks should be doing at the time, the Federal Reserve. So it was good fun.

Juliette Sellgren (11.48)

I love that. Yeah. Yeah, that sounds amazing. My English professor in junior year of my high school career, we call it a career. It's funny, my stint in high school, I guess he wouldn't let us talk unless we could tie it to a page number. And I think that that skill is really valuable. I just remembered that and that that's why I think not citing other people necessarily, but having a strong grasp and being able to, if you were asked where did you get this idea from or what statistic are you studying, to be able to go back and actually point to where you got your ideas from is so important. I think it's maybe a practice in discipline and humility in the end.

Sandra Peart (12.42)

Exactly. That's just fabulous. I've never heard of a professor or teacher doing something like that, but I think it's wonderful. And sometimes we have a course at the Jepson School called Leadership Ethics. It's about the ethical challenges that leaders face and so on. And there aren't always easy answers when you are in the middle of an ethical dilemma. There are only a few things that are really sort of settled, dogma, murder is wrong, that sort of thing. But what we're trying to help our students come to grips with is what's the evidence on which their stance is based? And I think that's what your teacher was getting at. Where's the reference? What's the page? And it could be that it's a literary text, it could be some empirical evidence, might be a theoretical model, but there's got to be something. It can't just be, I believe this because I believe it.

And so I think it's really important as we think about discussion and conflict, that we also help students understand that it can't be just discussion that comes out of your head without any serious basis. It has to have some sort of grounding, whether it's in an intellectual text that I would want to rely on or it's some empirically grounded reason. And then we can start to talk about the text or the empirical results as opposed to simply, well, I feel that this is true, which is a phrase that's often used. And then if you dig a little deeper, there may be a reason for it and maybe it's a good one, or maybe it's actually based on fallacy of some sort.

Juliette Sellgren (14.52)

And speaking of this idea of discussion and ethical questions, I've realized that I kind of see the Virginia School maybe because this is how you and your co-authors see it, and maybe not, maybe you disagree, but I think this is kind of what was brought to light when reading the book, was that actually what these different schools have thought within economics at the time and public choice, what they were grappling with were these ethical questions about not only how does politics work, but how do economists even make assumptions and do methodology, if you could say that. And so I feel like I'm trying to smooth the pivot here. 

Sandra Peart (15.46)

No, absolutely. You're exactly right. And so I think why we both started thinking about discussion is that it's actually important to our daily lives, but it's also fundamentally important to the Virginia School. It's a perfect pivot actually. I will say that I think the most important passage in the book is the one that begins the book where Jim Buchanan in 1960, so a long time ago, lays out what he thinks are the two ways of approaching economics. And I'll say I went through my graduate studies at the University of Toronto without even realizing that there were two ways of doing economics. And it wasn't until much later that when I had read more carefully and maybe had some people kind of point me in certain directions or whatever, that I came to realize that what Buchanan is struggling against is fundamentally important to how we think about economics. And he points to the fact that there are two ways of, as he puts it, two methodologically distinct ways of doing economics. And he says in the first one, the economist sets up a goal for the economy and for the actors within the economy. And that goal, key points to efficiency as one possible thing, goal that could be presupposed.

And here's what's important is you then impose that on the model. I mean, it's part of the model and it's imposed on the people who were in the model and that he says in 1960 very different from what he's trying to do, which is a much messier kind of economics. And maybe that's why it's A, both difficult to do, and B, perhaps not as appealing to some economists, which is you don't establish the goal rapid growth or as I said earlier, efficiency. But instead you let the people within the economy, private individuals engage as he puts it in the continuing search for institutional arrangements upon which they can reach substantial consensus or agreement. So that's a very different way of doing economics. And really the book is about how the Virginia School led by Buchanan in this respect tried to have this second way of doing economics as an alternative. A methodological alternative wasn't that they thought it was going to be the only way of doing economics, but they wanted to convince students and faculty and others, the Ford Foundation for instance, that this was a viable way of doing economics.

Juliette Sellgren (19.02)

And I think it's hard to place this because we were kind of talking about this earlier, it's still a relevant discussion to be having. It is still something that is being figured out by people on the ground in economics, whether or not we know it. I kind of have a prediction that economics is actually diverging within itself into two different disciplines that both relate to the economy in some way. But we'll see if that happens. Can you situate the creation of the Virginia School and kind of why these questions were being asked and dealt with at the time in what was happening in the economy and in just the world at the time? What led to this happening?

Sandra Peart (19.56)

So I think it's a really good question. So he wrote that passage that I just described in 1960, and I think it comes at a point in which what's called new welfare economics had risen to be mainstream. New welfare economics develops in the 20th century and really takes hold by about mid-century. And new welfare economics is the notion that, as Deirdre McCloskey says, max U, that is maximizing utility subject to constraints and efficiency throughout the economic activity. And at the same time, economists are entering more and more into policy analysis and recommendations and being listened to more and more by policy makers as the gurus who can tell the federal government or the administration can provide advice about how best to ensure efficiency emerges and the economy grows and so on. And this is post World War ii. There is a great economic growth. It's a relatively expansionary in terms of economic growth period. And Buchanan goes to Chicago and he has as his teachers, one of his teachers, a member of what he calls later, we'll call the old Chicago School, Frank Knight. And Frank Knight is a much different kind of economist than Kenneth Arrow, new welfare economics kind of economist. Knight is, I would say he's much more a follower of John Stuart Mill, very much writes about discussion, the importance of discussion. He's a very deep thinker, one who's not easy to read or appreciate initially. It takes some time.

And Buchanan has said, and I've heard him say aloud and he's said this many times, that everyone early 1940s basically was a socialist and including himself. He goes to Chicago, he comes to realize that perhaps socialism is not the answer, and that this kind of new way that I described of doing economics is more of an answer in part because he comes to realize that policymakers are not, as he later would say, benevolent despots, so self-interested and they're publicly interested, but they are importantly, he has this insight that everybody is self-interested to some extent and everyone is the wellbeing of others. But it's not a great presumption to presume that all those people are in the administration, are they Suddenly, once they become politicians, they put their self-interests aside and they become only public spirited. And that's kind of the birth of public choice, that insight.

And it's the insight that underscores politics without romance and so on without romanticizing the people who are in charge. It's a Smithian, Adam Smithian insight. Adam Smith writes about how those in charge might treat the individuals as if they're pawns on a chess board. And I think Buchanan's insight as he departs from socialism and becomes an economist who's much deeper than he has sometimes imagined to be who has an insight about human behavior and applies that insight to all of us. And until then, the fact that those who are in charge might also be self-interested, that we're a messy combination of both self and other regarding interests as John Stuart Mill would say. So that's a bit of the context in which he makes this turn away from. So-called socialism, he's very much in line with what he, as I say later, we'll call old Chicago, and that's as opposed to New Chicago of George Stigler and so on the Max U of Virginia. And [he] wants to start a school of thought or at least expand his working with his colleagues, expand the room within economics for this notion that we need politics without romance. That human nature is human nature, as I say, a messy combination of motives and that we can't make exceptions for those who are governing and suggest that they are suddenly, as I said earlier, governed only by public spirit.

Juliette Sellgren (25.47)

Something that I not really had to deal with but had to learn about, especially through reading this book. Was that what the title meant? Yes, towards an economics of natural equals. And I think this is at the core of what you've just been talking about, what is an economics that's not about natural equals, I don't know. Is that what we do now? Because I think, at least from the way I come at economics and the way we talk about it, it sounds like it's about natural equals.

Sandra Peart (26.20)

Yes. So thank you for raising that. I think it's a really important phrase, obviously that's why we used it in the title and we used it in part to signal that Buchanan throughout his career becomes more and more deeply associated with, or a follower of Adam Smith. So the phrase harkens to Adam Smith, who in his Wealth of Nations 1776 work, so we're almost at the 250th anniversary of its publication. He writes about how a street porter and a philosopher, so a street porter or someone who back in the 18th century would carry items around for other people. So they would have big packs on their back and essentially haul stuff from point A to point B. Back in the day when it was very difficult, you didn't have a truck to put all your junk in and then drive it across town. So a street porter did that for you if you were rich enough to be able to hire someone to do it.

So it's a very lowly occupation. Street porter and a philosopher, philosopher at the time would be an academic, a teacher, and a great university. He says that when they're young, that is little young play things before the age of eight, as he puts it, not even their parents. This is a really hard form of egalitarianism, not one apart from the other. But then at some point the street porter and the philosopher become educated. They have life's experiences, they are subject to the division of labor, which of course is what he's writing about in this chapter of the Wealth of Nations. And they become the street porter and the philosopher, and they end up in extremely different outcomes as a result of what David Levy and I call incentives, luck and history. So all these things that happen to them throughout their lifetimes and they become so dissimilar. Adam Smith, he uses that word so dissimilar once they're adults, that they think they're different types of people. And he says that it's the vanity of the philosopher to presume that he's superior to the street porter, that he's a different type of person from the street porter. It's really, he says only the division of labor that led to that greatly different outcome. So that's a very strong statement of natural equality. And basically it's a statement about an age old question in leadership studies is partly why I'm a dean of a leadership study school.

Are leaders naturally different from the people who are not leaders, or is it in fact that they have had different circumstances? Do you learn leadership? Are you born a leader? Thomas Carlyle who in the 19th century will attack John Stuart Mill and they get into bit of an argument over this. Carlisle will talk about the great man theory of leadership, how people are born naturally superior. Some people are born naturally superior to others. Well, back to Buchanan. Buchanan, as I said, becomes more and more of a Smithian over time. He comes to appreciate the power of Smith's presumption that different outcomes are mainly the result of the division of labor, luck, history and incentives. And he even comes to realize that, and this is quite late in his career, that black people for instance, have not had the same opportunities to start fair in the race of life, to use the phrase that John Stuart Mill would use.

And he comes to appreciate that it might be that black workers then could be subject to affirmative action, not a state sponsored, but that some organizations could allow for them to have special circumstances to let them counteract the stereotype of whatever existed at the time. So at any rate, Buchanan becomes more and more of a Smithian, and he reads Smith deeply and comes to appreciate Adam Smith's insight. The other thing I would add is that experimental economists have a certain affinity with this Virginia School approach of letting discussion generate outcomes and not imposing a model instead on the individual actors. Because experimental economists put individuals in various settings and then observe what the outcomes are, rather than put constraining, constraining the model by imposing an assumption about how people are going to behave in various circumstances and what they've found, the work of Vernon Smith and Bart Wilson has been very important in this regard.

They've found that in fact, a lot of Adam Smith's insights about altruism, about self-interest and so on actually play out in the experimental lab. So there's a reason then if you think about the Virginia School, and I know I'm going on quite a long time here, but it's sort of an interesting progression from Chicago 1940s with Frank Knight, Virginia School in 1960 with Buchanan and Nutter and Tullock and so on. Then the Virginia School eventually ends up at George Mason and so do some experimental economists, including Vernon Smith for a period of time and Bart Wilson. So it's quite an interesting affinity that is an affinity among them, but also an affinity with Adam Smith.

Juliette Sellgren (33.00)

And I'm proud to report that experimental economics is also alive and well at UVA. So there is a Virginia strain of experimental. My professor Charles Holt, he's really amazing. He dresses up as Vernon Smith for Halloween is the level of influence. I refer to Vernon Smith as the father of experimental, as I think many people do. But then I call my professor the son. And in some ways I say this jokingly, but I hope to become the Holy Spirit of experimental. Oh, that's wonderful. I don't know if that's going to happen, but that's the joke I make.

Sandra Peart 

Oh, Juliette, I hope it does.

Juliette Sellgren 

I'm glad to know that it really, it's backed in this history. And also Holt one time we were working and he actually came in really excited that day and was like, I just found out that our intellectual lineage goes back to Adam Smith directly, which was really cool because we do, we base a lot of the stuff we do off of Vernon Smith and Bart Wilson's work and kind of building off of that. And it's really interesting to watch, and I want to get into that a little bit more. But first what I want to ask is kind of along the lines of the division of labor stuff. So you've spoken a little bit about how Buchanan thought about it, but did either him or Smith really take issue with that fact? Buchanan seemed somewhat worried slash concerned about that, but did Smith, because we call, we say one of his main contributions is this idea of the division of labor and in economics we think about diversity and differences as creating value, but can we see either of them being concerned and how do they kind of deal with this?

Sandra Peart (35.10)

Yeah, so that's a terrific question. So I think Smith sees the division of labor writ large as really the main cause of the wealth and the growth of the wealth of nations. So it's got just an overwhelming appreciation of its importance. And it's not just the pin factory example. So that's the very famous example that everybody goes to and they talk about the division of labor, and as I say, it's very famous. It's a passage in which he talks about how someone will straighten the metal and someone will sharpen it and someone will put a head on the pin, and all these different tasks are assigned to different people. And then he says at the end how many more pins a person might be able to make in a factory, the pin factory compared to one person individually trying to make them. And it seems like, oh, it's brilliant.

It's a great example. But at the end he says, actually this is just but a trifling example of the result of the division of labor. And that sentence is often missed by people who are reading, even people who are specialists in on Smith don't realize that he's saying something very profound there. He's saying that if you look around and you can see the results of the division of labor and if act, that's actually not really where the action is, that's trifling. What's important or non-trifling significant, our own little room that we're in or the walk that we take across the campus, quadrangle or whatever. But the division of labor is operating writ large across the entire economy. It's what allows the little boy who's working on a steam engine to innovate and because he's lazy and wants to have time to play with his toys or whatever, figures out a way to open up the steam valve without him having to every couple of minutes go do it physically.

It's innovation is the result of the division of labor and innovation for Smith happens, as I say, in all these unseen and sometimes underappreciated ways, and that's what causes growth, economic growth as opposed to, as I say, the sort of static example of the pin factory. And it's also for Smith, a matter of natural liberty, and that's something that Buchanan will also write about and obviously and think to be tremendously important. In Smith's time, it was the liberty to actually move from occupation to occupation or from place to place, which was severely hampered in the 18th century, late 18th century. And he's writing against the laws that restrict movement of people guilds, which prevented people from moving into areas in which they had monopolies or monopsonies and Buchanan, when he writes about the different ways of doing economics, he says that his way of doing economics is going to be one that will actually afford to individuals more liberty to make choices than the former way in which the economists impose various activities onto individuals.

And his point is, well, it's not that ideologically, I think small government is a good thing, but it's that probably though not always less interference would happen, would be the result of this second way of doing economics than it would be in the first way. And in the 1960s, we start to see huge expansions, not to say they hadn't happened also earlier in the century, but post 1960, much more intervention as a result of the idea that the people in charge know better about how to make sure that we save enough for retirement and so on. So the division of labor truly significant in terms of being connected to natural liberty. This isn't to say that Smith doesn't see that doing a menial task as a result of the division of labor can't be stultifying. So he does allow that. It can be a really difficult existence if all you do is straighten a pin all day. He's not talking about the stultification in that context, but you could imagine him saying it. But overall, the division of labor is, for him, a tremendously important thing and not one that worries him.

Juliette Sellgren 

Yeah, I see that. I don't know. I feel like it's something that has to be talked about. I'm glad, glad you could speak to it because it's something that I think often gets criticized in our line of economics. And so to be able to speak to that and understand how they were thinking about it and how important it was, is fundamental, right.

Sandra Peart (41.28)

I guess I would just add, I don't want to say that Smith is writing about the virtues of the factory system or this sort of neoliberal stuff that people worry about, but really he's talking about the ability, as I said earlier, to innovate. And he sees ordinary people as being creative individuals who need to have lots of choices ahead of them in order to flourish creatively and to innovate.

Juliette Sellgren (42.04)

And this is exactly the sort of questions that are so important for any sort of person, philosophers, economists, the people in the book that you've explored, the thing that's so important is how do they view human beings and how do they view themselves? If you don't understand that you can't understand them, if you don't understand what, I just finished a class on Tolstoy, if you don't understand what his life looked like, you can't understand the extent to which all of his characters throughout his life reflect him in a given moment. And I don't know how to explain whether it humanizes economics or if it just adds this level of complexity where we want to say, oh, well, this is objective. But any sort of research, any sort of thinking is necessarily a product and related to the person who is doing it. And I think the Virginia School, and I'm wondering if you agree with this, this might just be some random conclusion I'm kind of pulling out of my head because I want it to be true. I feel like the Virginia School doesn't dismiss this idea. It kind of embodies this idea in a way.

Sandra Peart (43.28)

Right, right. No, I think that's exactly right. I mean, it starts by thinking about humans, thinking about human beings and how they act, and it starts with the presumption of natural equality. So again, to go back to the title, so humans, as I said earlier, we're this messy combination of motivations, some of which are selfish, some of which are self-interested, prudent, and so on, some of which are altruistic or other regarding as John Stuart Mill would call them. And so that's what I'm like, that's what you're like, and it's also what those who are in authority are like, and that applying it to those in authority or to politicians, that was their great insight today it seems like, well, of course, that we accept that. But again, to go back to 1960, and previously there was a very important school of thought, and I think it does prevail to some extent today that politicians are public spirited and they're only public spirited. And I will agree that they are public spirited, but I think they're also self-interested just as I am. And I think we do ourselves a disservice, and we're not cautious enough if we're presuming that they're only public spirited.

Juliette Sellgren 

But I often, I see public choice as saying that once they go into office, they're the same person. But is it really a balance? I feel like often it's sold that there's, there's no public spirit at all, and that it is purely self-interest and not this public spirit other interested thing. There's no shift in preferences. So I don't know, what do you have to say about that and what does the Virginia School have to say about that?

Sandra Peart (45.39)

Right. Yeah, I mean, I think it would be, I don't want to put words into their mouths that I'm not terribly sure of, but I think it would be they're responding to different incentives, so they may act differently than they did when they were in the general public, but that would be a result of the different circumstances in which they're placed. So no, they're pretty stable, I would say as individuals, it's possible for people to change and remake themselves, but it's really hard. John Stuart Mill writes about this, and I'm a runner and I'm always trying to think about the next run and how I'm going to train for it and I'm going to be better or whatever. So I want to be a better person or at least a better runner or a better writer or whatever. And I think both Smith and John Stuart Mill and Buchanan would allow that. We're constantly thinking about how to be better and trying to make ourselves better. But the point is, how do we it? Are we remaking ourselves or do we need to be nudged to be better people, or does someone actually have to wholly remake us? And the Virginia School would suggest that those who believe in new welfare economics would want to reshape people in ways that violate their ability to choose for themselves. And so they would be opposed to that.

Juliette Sellgren (47.41)

And I think this so beautifully comes from this idea of the division of labor being good and beautiful thing. If the person is inherently good in adding value, there's no need to remake, you shouldn't want to remake. And I think that that's a really important conclusion that we kind of, maybe not we, but we as a society, given the way that policy conversations go, a lot of people feed into this idea that, well, it's not remaking them, but it is. And some of them are more or less explicit about it. But I kind of want to dive into the other contributors to the Virginia School. So we talked about Buchanan, we talked about how influential Frank Knight was to a lot of people, not just the people in the Virginia School, but other people at Chicago. But who else is in the Virginia School and what are their contributions and how has it kind of shaped the school itself and public choice?

Sandra Peart (48.44)

Great question. So I would mention Warren Nutter, who with Buchanan is trying to build something different and new at the University of Virginia. And Nutter is not so well known today, of course, but he was tremendously important. And I know actually because I know someone who was invited to apply to UVA and did his PhD at UVA, John Snow, who's an important economist in his own right for the US in the 1980s. And John has told me that Nutter called him when he was applying to grad schools. And at that point, John Snow was heading to Harvard and Nutter had a conversation with him on the phone telling him what a different place UVA was and convinced him to go to UVA at the time. And I give that example because I think it shows just how much energy and determination they had to put together a program with really good students and really good faculty.

So Ron[ald] Coase was there as well. Another really important economist, Nobel winning economist responsible for the field of law and economics to a large degree. And Nutter was important in the building of this new and special place, both recruiting students, but also faculty and visitors to come by. And they had a lot of really active visiting program where people would come and give lectures and exciting to be there at the time. The other thing I'll say about Nutter is that he was very important, did very important work on Soviet growth rates. And here he's a bit of a voice in the wilderness because in his view, the growth rates that were accepted by American economists and put forward by American economists estimating growth at the Soviet Union were incorrect. And in his view, it didn't make sense. They were inflated. And he argued that it didn't make sense to presume that the Soviet Union was simply a continuation of what had been before that institutions mattered.

He argued. And so this newly formed unit, USSR was vastly incomparable and different from the US and also what had been before. And David Levy and I have also done some work on Americans treating the growth rates in economics textbooks that were popular in between 1960 and 1980, including Paul Samuelson's and others. And it is true that economists made assumptions about the performance of the Soviet economy, that it was efficient, for instance, and if it was efficient, if it was investing more in investment goods and consuming less, which seemed to be the case, then it would be growing more quickly. And so Samuelson famously predicted it was going to catch up with the US and overtake the US at some point. And as it turned out, Nutter’s caution. And he approached the whole situation quite differently and spent time traveling in the Soviet Union sort of looking at what his eyes would show him and not imposing, again, a model on his analysis and came up with, as I say, much lower estimates and a very different conclusion, letting the data or the information speak to him as opposed to presuming the economy was on the frontier of a production possibility curve.

I should of course also mention the other, well, there are many others, but one other very important economist with whom you'll be familiar, and that's Gordon Tullock, who also ends up going to George Mason with Buchanan. And Tullock is just a wonderfully important public choice economist who has a bit of a harder edge to him, I think, than some of them just always thinking about incentives and how people respond similarly to incentives and writes an important work, “The Economics of Organization” in which he, I'm sorry, the economic. So that was one, but I'm thinking of the scientific organization work in which he argues that science is, and this is his word, a racket, and that scientific discovery can be the result of mistaken or possibly fraudulent or possibly just interpretive situations in which people don't check their results or they use results that aren't replicable and so on. And that's a prediction or I dunno if it would really be called a prediction, but it's certainly a way of looking at scientific inquiry that has seen some verification in the last few years as replication studies have shown that it's very difficult, if not impossible, to reproduce some sort of well-known results. So Tullock has some very important insights.

Juliette Sellgren (55.12)

It's funny, but maybe not funny. It might be a little sad. But what I see in kind of, if we take what Tullock said as a prediction or even you look at Hayek, it was a warning. It looks like even economics is this now, right? The scientism, the obsession with the having results and being objective and everything about the institution in which we conduct research and science and all that sort of stuff, not, I don't know. I don't want to call it bogus, but it's really dangerous in a lot of ways. I think he was right, being able to recreate something. We always talk about it, but I think about this, do we ever actually try to replicate other people's experiments? Not really. We don't. We talk about it. That's how you write a paper is so that someone else can replicate it. And sure, you can probably eye it and say, that looks legit, but if everyone buys into the same idea, what happens when you get someone else who doesn't, if they don't replicate it.

Sandra Peart (56.28)

Yes. Now what you're raising is a really important point, and I'll mention another member of the Virginia School- Rutledge Vining in this context because binding sometimes he seems a little different from the other Virginia school economists because he's doing work on how to estimate our conclusions. And he has a very important exchange in which he essentially advocates for data exploratory analysis in which he says it's important not to impose a model onto the data, but instead to let the data give us the results. And I think that is a much more humble way of approaching, I think it's methodologically sound, but it's also a humble way of approaching being a scientist because it's not, and you said alluded to the dangerous associated with one is right, essentially, and not then sharing the data or making the data available widely available, or deciding that as a scientist, it's all right to extrapolate from the data or interpolate through the data that don't exist and so on.

All of that is, I would say is a very, well, it's not humility. I know what the data should be saying, and so I'm going to impose that onto the data. Whereas Vining, as I say, it's much more humble and willing to, and as a methodological stance argues for letting the data speak for themselves. And I think that humility, actually, I'm not sure Tullock would be classified as being humble, but he certainly had a good sense of humor. And I think that too is a sign of a certain humility. But I do think humility is humility as scientists is a way of describing the Virginia school, and they're really railing against what they see as lack of humility. In Vining's case, it's against [Tjalling] Koopman's. In Buchanan's case, it's against the new welfare economists and the danger that they perceive. And it's something David and I have written about in a different book, Escape from Democracy, is a danger of the expert that is the economist or the advisor to governments presuming that they know better, whether it's in terms of how the model should be shaped, whether it's in terms of how they think, they know how people should behave, even if they don't behave that way.

And that presumption goes back to the late 19th century when a person I've written on a lot, William Stanley Jevons, talks about how we need to remake people because they don't actually behave the way economists think they should behave. So it ties into the conversation we had a few minutes ago about reshaping or remaking. Virginia school is not about remaking. And it goes to your point earlier about whether you think human nature is a wonderful thing the way it is. If you do, then you don't need to remake it or whether you in fact presume you've got the answers and you want to impose them either on the data or on the people.

Juliette Sellgren (1.00.30)

And I think to use the Warren Nutter example with his interpretations and estimates of Soviet growth rates as an example, you can see that especially what you mentioned briefly earlier, that even Buchanan said that everyone at the time was kind of socialist before all of this, that when albeit an extreme version of the socialist philosophy comes to power, a philosophy that inherently is about remaking people and institutions and an economy to think maybe because you presume it's a good thing, that the incentives and structures and existing production capabilities of an economy wouldn't change with this radical remaking is kind of absurd. It's this allowance that doesn't really make sense. And so the fact that Nutter saw through that, that he could look at it and see that, well, if your entire platform, even though you weren't necessarily, it's not an electoral platform, he wasn't elected. But if all of that is about remaking things and changing things, how on earth can we continue to assume that things continue on instead of that they sharply pivot in one direction or another?

I don't know. This example to me speaks volumes to every single aspect of the time they were living in, the conversations they were having and the conclusions they were drawing. And it stands kind of in contrast as I think behavioral and experimental and Smith and this main line, as Boettke calls it, a line of thinking that comes down from Adam Smith stands apart from mainstream. And so I'm kind of wondering what you think about how this maybe not discussion. It seems like in a way, not only is there siloing within disciplines, but there's less. But how do we see the effects of the Virginia School and all of that in experimental behavioral, these things that kind of allow the data and the people to explain what the model of humans should look like. Is it alive and well? Is it as alive as it was before or has it diminished?

Sandra Peart (1.03.01)

Oh, that's a great question. Is it as alive as it was? So I'm not sure that that time, 1960, roughly about then must have been one of the most, as I said earlier, exciting times to be an academic if you were there, if you were part of that school because they were all brilliant. So to put that many brilliant people together and have them working with terrific students like Richard Wagner and so on, it had to have been incredible. So is it quite like that? I know there are pockets. There are universities where really wonderful work is work. And so I would point to UVA, which you did earlier also, George Mason of course, where Pete Boetkke is, just terrific programs there and somewhat different in that they've expanded to having programs that involve shorter periods of time for students to come together. So it's not just the graduate program anymore, but the fellows, the Adam Smith fellows and so on, the Buchanan Fellows. And so I think that must be a really wonderful, again, energizing place to work where the ideas are what matter, and people are talking about ideas all the time in terms of sort of broad reach of public choice. I mean, I think in some ways they succeeded. So I said earlier today, it's not controversial to say at least it's not particularly controversial to say that politicians might have some self-interested motives. So that sort of seeped into our understanding, but I think there is still resistance to it.

And so I don't know that it's fully won everyone over. But then within economics, there's so much specialization that it's, I think in a lot of departments, almost all departments, no attention is given to the nature of human nature, for instance. And we do simply presume as economists, many economists that human nature is just outside our realm of study. Again, putting aside public choice and experimental, which too is I think got some really exciting and pockets of thought. And again, Chapman would be not again, but Chapman University would be one university I would point to, again, UVA and George Mason and some other places as well. I think the kind of work that Bart Wilson is doing and Vernon Smith is doing is tremendously important. I've used this word messy a few times that we're a messy combination. And I do think that makes it difficult for a discipline that is highly technical and driven by technique. It makes it hard to make an inroad into that kind of thinking, the technical thinking.

Juliette Sellgren (1.06.46)

And so looping it kind of back to what we were talking about at the beginning with asking these ethical questions and kind of parsing through what is humanity? What does it mean to do the right thing? What is the right way to conduct research or learn about the world? All these things that these amazing economists we're grappling with, how do we do that? How do you do that today? And how can aspiring economists do that? But how can even students in your lives, I think it kind of gets away from us sometimes.

Sandra Peart (1.07.25)

Yes. So I guess the one thing I would say is humility. To the extent that we can encourage each other to be humble and not presume that we have the answers, especially answers that pertain to someone else. That's important. And it's hard. We think we know we do know things, so we know things. Then once we know them, does that mean that we need to impose our knowledge on someone else, or do we encourage other people to read widely, for instance? I do think it's important for all of us to read and think. You said you've recently been reading, was it Tolstoy?

Juliette Sellgren 

Yes.

Sandra Peart 

And I was so happy to hear that. And I'll say, my son's been reading Tolstoy, which is just an odd coincidence, but it's rare for a person your age to, I mean, you read it I think as part of a class. He just picked it up and read it, and you don't want to harp back to a time that we won't achieve. So I don't know that we actually will achieve a time when people read again outside of school. But it's a wonderful way to learn, and it's certainly a way to learn humility. And in this political moment, I think humility is something that's lacking, and we need to sort of double down on wanting it both from our intellectuals and from our politicians, but start with the intellectuals because that's the world in which we live, and then maybe it'll broaden out to the rest of society.

Juliette Sellgren 

That's wonderful. Thank you so much for that response and for coming on the podcast. I'm sorry for taking up so much of your time. It's fine. I have one last question for you though. Okay. If you'll allow me, what is one thing that you believed at one time in your life that you later changed your position on and why?

Sandra Peart (1.09.50)

So thank you for that question. And I'll just say there are many things, but the one I want to mention is that I did, like many other people used to think that politicians were benevolent, that they were good at looking after us. And part of this is that I grew up in Canada, and Canada has a sort of different, well, we have a different political system, but also I think a different view to a large extent about politicians. And I knew no program without having anyone teach me any public choice economic. And then I came to believe that politicians were not benevolent and that I'm more inclined now, and it's a result of reading Adam Smith than Jim Buchanan and others that leaders or politicians sometimes treat us as though we are chess pieces and that that's not a good thing, and that we need to have our eyes open as we allow ourselves to be led by politicians or other people. So that's what I've learned that I didn't used to know.

Juliette Sellgren 

Once again, I'd like to thank my guests for their time and insight. I'd also like to thank you for listening to The Great Antidote Podcast means a lot. The Great Antidote is sound engineered by Rich Goyette. If you have any questions, any guests or topic recommendations, please feel free to reach out to me at Great antidote@libertyfund.org. Thank you.