Editor’s Note

Just itching to devour another issue of the Milken Institute Review? Golly, I sure hope so, since you’ve got some really great reading ahead. Here’s a snappy preview.

Staci Warden, the CEO of the Algorand Foundation, explains what went so terribly wrong in the high-roller game of cryptocurrencies. Shenanigans, “in the teeth of the geopolitical and macroeconomic policy headwinds that have affected all financial assets ushered in $2 trillion in cryptocurrency losses in what has become the entire ecosystem’s terrible, horrible, no good, very bad year,” she acknowledges.

But she outlines the case for not tossing out the proverbial baby with the bathwater. “Imagine that anyone from anywhere could create a financial-service offering using opensource software — and that anyone from anywhere and at any time could make transactions using that service,” Warden writes. “The value proposition in the technology underlying cryptocurrencies is akin to that of the internet itself.”

Stephen F. Ross, a law professor and codirector of the Center for the Study of Sports in Society at Penn State, weighs the equities in the effort by the Professional Golfers Association of America to squeeze the upstart Saudiowned LIV Golf out of the big business of professional golf. “Where Congress has not passed an explicit exemption,” writes Ross, “it is decidedly not for the courts to tolerate limits on competition because judges decide that in a particular case competition is not the best policy. Foes of Saudi ‘sportswashing’ are free to go to Congress to block LIV, but they should not be able to prevail by persuading a federal judge of the moral failings of Mohammed bin Salman or Phil Mickelson.”

Rachel Sachs of Washington University (St. Louis) explains what Congress managed to pull off last year in the typically futile effort to contain drug prices — and what more could be done without blowing up the health care system.

“The drug provisions of the Inflation Reduction Act represent a significant step in rationalizing the byzantine system of developing and distributing pharmaceuticals that restricts access for millions,” she concludes. “But it plainly only represents the beginning of an uphill battle to contain costs while being mindful of the tradeoffs, including the implications for innovation.”

Anton Korinek and Megan Juelfs of the University of Virginia’s Darden School of Business argue that the decline in demand for less-skilled labor is a harbinger of a nottoo- distant future in which machines could replace all workers, requiring new ways to distribute income fairly. “In the past, rather than eliminating the need for human labor,” they acknowledge, “new technologies only shifted the tasks for which humans are employed …”

“There is, however, no guarantee that history will repeat itself. Far from it: there is reason to believe that future technological change will decouple productivity growth from the fate of workers and may ultimately lead to the end of human labor.”

Jeff Biddle of Michigan State and Daniel Hamermesh of the Institute for Labor Economics in Germany contemplate a related, but less dramatic, change in work: the four-day workweek. “Should governments encourage fewer hours of work across the year, they ask? Maybe. But (as economists seem compelled to do) they are quick to forecast rain for the day of the parade: “Remember that in a relatively competitive labor market like ours, less work means lower material living standards.”

Molly Espey, an economist at Clemson University, outlines the loss of large predator birds to the blades of wind turbines — and how market forces could be marshalled to minimize the conflict between an otherwise benign source of energy and the survival of iconic eagle species. “The menace to these revered predators should not be ignored — and as a matter of law (The Bald and Golden Eagle Act of 1940) cannot be ignored,” she writes. But happily, she explains, a system of tradable permits modelled on exceptionally successful market-based mechanisms for minimizing the cost of controlling pollution could allow the birds to coexist with the hundreds of thousands of wind turbines needed to contain climate change.

Michaël Aklin of the University of Pittsburgh and Johannes Urpelainen of Johns Hopkins outline the compelling case for protecting both people and places from the disruption caused by efforts to contain climate change. “A just transition for the energy sector is a moral obligation and, as a practical matter, a necessity for sustaining congressional support for a rapid switch to renewable fuels,” they argue. The jobs at risk “barely rate a glance in a labor force of 165 million. But the influence of coal-sector workers (and their employers) is wildly disproportionate to their numbers.”

Larry Fisher, a former New York Times reporter, wonders whether the time is right for another Cash for Clunkers initiative — this time to speed adoption of electric cars. “Marrying EV purchase incentives to a requirement that the automobiles traded be scrapped sounds like a win-win — and maybe it would be,” argues Fisher. “But from what we belatedly found out about the first Cash for Clunkers, it’s worth a close look before we leap.”

Ready for more? This issue of the Review includes a chapter of Alan Blinder’s new book, the delightfully readable Monetary and Fiscal History of the United States, 1961-2022. You’ll open it expecting a worthy serving of leafy greens and instead discover the molten chocolate cake that lies within.

As my Jewish mother never said, you should only enjoy.. —  Peter Passell