Policy Punchline

Greg Lewis is an economist and the Senior Principal Researcher at Microsoft and co-leads the ALICE (Automated Learning and Intelligence for Causation and Economics) and EconML projects, an effort to develop use AI and machine learning for economics research. He specializes in industrial organization, market design, applied econometrics and machine learning. His work is unified by the twin goals of making better sense of microeconomic data, and using those insights to optimize firm decision making and improve market performance. His research has spanned a range of industries – online retailing, online advertising, procurement, electricity, education. Before joining Microsoft, Prof. Lewis was a professor at Harvard for seven years. He has a Ph.D. from the University of Michigan.

In this interview, Harsh and Tiger ask with Prof. Lewis about his research on consumer’s shopping trends online, how tech platforms rank search results and products, how to do causal inference using neural nets, how machine learning is in some news “the new statistics” and how it’s being integrated into econometrics.

In his recent paper “You Can Lead a Horse to Water: Spatial Learning and Path Dependence in Consumer Search,” Prof. Lewis introduces a new model of consumer search known as spatial learning. He explains his main findings in layman’s terms, and discusses how online platforms have the ability to manipulate consumer purchases to some degree by playing an active role in ranking products during a consumer’s searching process. His key insights focus on how consumers develop beliefs about products they see online, and how those beliefs change through experience and observation of reviews. More importantly, his methods try to understand how a good or bad experience with a particular product influences a consumer’s buying decisions about related products.

Prof. Lewis is a leading advocate to use machine learning methods for fundamental research in economics. In this conversation, he breaks down his development of DeepIV: a method for instrumental variable (IV) analysis using deep neural networks. He starts off by explaining IV analysis using simple examples and guides us through the improvements offered by deep learning. He elaborates that while neural networks are incredibly powerful at pattern recognition, their black-box nature offers great challenges as it fails to explain their predictions.

Prof. Lewis also addresses some “big-picture” questions about research in general. He talks about application of theoretical models to real-world scenarios, the effectiveness of computer simulations, as well as the age-old debate about how to uncover the “truth” from data. He talks about conducting research in the private sector as opposed to at a university, being optimistic about technology, and even a paper by Bill Gates about pancake flipping.

Last October, the IEA declared that solar power is “the new King of Electricity.” But as it currently produces only 2% of the global electricity, the newly crowned energy royalty has a long way to go before it will reach full dominance. In Taming the Sun, Dr. Varun Sivaram outlines the financial, technological, and systemic innovations that could allow solar power to provide a third of our energy in thirty years and truly claim the mantle of “Electricity King.”

Dr. Sivaram began our discussion by outlining the transformations in solar power that will make it the world’s primary energy source. He hopes that financial markets will make more capital available to fund both small-scale and large-scale solar projects. Solar technology itself also must make a qualitative leap, as incremental improvements in efficiency are replaced by entirely new ways of “taming the Sun.” Perhaps most importantly, energy systems must be revolutionized so solar energy can power transportation, manufacturing, and electric grids at large.

These innovations will help solar power overcome the complex challenges that it still faces, Dr. Sivaram argued. Solar panels can produce energy in unpredictable patterns, and only during certain hours of the day -- a phenomenon known as “the problem of intermittency.” Because grids that rely on solar power will have a large surplus of energy during periods of peak production, solar panels produce electricity when demand is at its lowest. That means solar producers of electricity sell energy at relatively low prices in a pattern known as Solar Value Deflation. Solving these issues could require storing electricity for future use using new battery technologies and hydrogen fuel cells, controlling energy demand so more electricity-consuming activity occurs during peak hours, and expanding the size of the grid to ensure that there is demand for solar electricity whenever it is produced.

Dr. Sivaram is particularly excited about a more speculative model for solar power from Taming the Sun: modular microgrids. He imagines distinct regional microgrids across the country that are linked through High-Voltage Direct Current power lines. Each locality or city would primarily use its own grid, but could “import” or “export” electricity to neighboring grids when solar panels are over- or under-producing. Each microgrid could separate from the national system, so dysfunction in one part of the grid could be easily contained. Dr. Sivaram added that technology that aggregates electricity being produced by individual solar panel owners and distributes it to where it’s needed could be instrumental in such a system.

Innovation of all types, however, is useless until it is applied to major power grids. India is one major electricity market with high potential for solar consumption, which makes it a source of hope for Dr. Sivaram. As India hurtles through stages of development, its energy demands will grow dramatically, and Dr. Sivaram is confident that current enthusiasm about renewables will continue. If he’s right, India will avoid becoming the world’s biggest emitter and move to the forefront of solar power. Though reform is urgently needed in India’s distribution utility systems, solar panel construction is cheaper in India than anywhere else, which is a promising sign for proponents of solar power there.

Global energy markets are at a crossroads, and Dr. Sivaram is leading the effort to put the world on the path away from fossil fuels and towards solar power. But he says that if the world is going to truly tame the sun, “we need new scientific solutions and we need public policymakers who understand what needs to be done.” For anyone interested in cutting-edge scientific solutions and the ideas that will shape the next generation of solar policymakers, this week’s discussion is a must-listen.

Mathias Risse is the Lucius N. Littauer Professor of Philosophy and Public Administration at the Kennedy School at Harvard University. He also serves as the Berthold Beitz Professor in Human Rights, Global Affairs and Philosophy and Director of the Carr Center for Human Rights Policy at Harvard University. His research questions the role of global justice in a wide range of topics like human rights, inequality, taxation, trade, immigration, climate change, and technology. He focuses on the “big questions” of political and moral philosophy in the United States and in a global context.

In this interview, Tiger and Marko discuss with Professor Mathias Risse his theory of “grounds of justice” and how technology changes the way we look at global justice. We go over the just nature of technology and how should individuals look at technology as being inherently fair. Risse sheds light on the rising movement across philosophy departments to critique and reform the widely used theory of John Rawls to include minorities and marginalized groups and how that has impacted philosophy scholarship. Lastly, we wrap up looking at politics in the United States and how the electoral college impedes the process of having fair and just elections, and why removing it could solve the problem.

Professor Mathias Risse has written three books with both “justice” and “on” in the title, yet all of these works appear to tackle a similar question: how should philosophers handle questions of justice in a global context? It all started with his book On Global Justice where he established his famous “grounds of justice” that global justice can be analyzed on.

However, how do these grounds change when we factor in the rise of technology? Can technology stand alone as its own ground of justice, or will it fit into the other pre-defined grounds of justice? Mathias Risse explains the future of technology in global justice and how technology can fit into his original theory from On Global Justice.

Additionally, we ask Prof. Risse his thoughts on the inherent nature of justice of technology: is technology inherently just? Is technology capable of being just as unjust as human actions and trade? He brings in other notable professors who have researched the topic including Princeton Professor Ruha Benjamin to answer this question on the just nature of technology in society.

John Rawls has provided a foundational understanding of political philosophy, but his work has recently been under fire. Rawls may have been able to provide a great framework for political philosophers but it overlooked the experiences of minorities and marginalized individuals in the United States.

Mathias Risse shares how philosophy departments have been attempting to critique and expand Rawls’ theory to include the viewpoint of marginalized groups in the United States. He shares how this changes our understanding of Rawlsian theory and what work is left to be done in Philosophy departments across the nation to make political philosophy more inclusive.

In the fall of 2020, Mathias Risse along with John Shattuck wrote a series of papers called the “Reimagining Rights and Responsibilities in the U.S.,” where Risse and Shattuck worked to explore areas of domestic politics and public policy that lead to injustice. These reports ranged from LGBTQ+ rights to voting rights and they all ended with a series of policy actions that could be taken to improve American society.

One policy action that is supported is the abolishment of the electoral college, but why would its removal lead to a more just society? How did the electoral college disenfranchise individuals and how does it continue to build a barrier to fair elections? Mathias Risse also takes on this question and shares with us his findings on how the electoral college impacts justice and how removing it can help increase the fairness of U.S. elections.

Robert Langer is an acclaimed chemical engineer, professor, and investor in biomedical technology. He is one of 10 Institute Professors at MIT, which is the highest honor that can be awarded to a faculty member. He has written more than 1,500 articles, with 1,400 patents issued and pending worldwide that have been licensed to over 400 companies. He is the most cited engineer in history with an H-index of 283 and over 331,000 citations according to Google Scholar. His inventions are estimated to have affected over 2 billion lives, and his most recent public work involves the coronavirus vaccine created by Moderna, which is the biotech company he co-founded.

In this interview, Arjun, Michael, and Tiger discuss with Prof. Langer his early career struggles as a freshly minted graduate student, his groundbreaking postdoc research on blood vessel growth for Judah Folkman that few believed could become reality, the future of tissue engineering technology, why the mRNA vaccine is safe and has withstood the test of time, the success of Langer Lab in spurring dozens of biotech companies, and the future of medicine amongst many other topics.

Prof. Langer was first offered 20 traditional chemical engineering jobs after he graduated from Cornell’s PhD program. Instead of taking those offers, however, he fought an uphill battle to find a position in medical research, eventually working with Judah Folkman at the Boston Children’s Hospital. Prof. Langer recalls that he didn't know too much biology about chemistry in his early career, so a lot of times he felt he was in the dark.

For the years that Prof. Langer has run his lab, the Langer Lab, he and his team have focused on two broad areas in biomedical engineering: tissue engineering and drug delivery systems. Both research areas lie at the core of many modern medical revolutions, from advanced drugs to synthetic organs.

Another drug delivery breakthrough that Prof. Langer describes more in-depth are star-shaped pills. The guiding principle behind the design is the following: standard pills are only able to deliver their encapsulated drug for a day. There are more crude ways to design pills that can administer drugs for longer periods, but the bulkier design could cause harm to the host, or block part of the digestive system. The star-shaped design solves for this: it is a pill that is small when ingested, expands inside the body, and leaves a large hole in its center for the digestive track to act normally. This kind of pill would make delivering some drugs, like insulin, much easier.

Prof. Langer then goes on to describe some of the broader aspects of these research fields. What are the most promising future applications for tissue engineering and drug delivery research? What are the current obstacles/limitations in research for tissue engineering and drug delivery systems? What capacity does AI have to further push the frontier in research for these fields?

Prof. Langer attributes two reasons to the amazing speed of the mRNA vaccine development process: the superior nature of the technology itself in comparison to previous vaccinat technologies, and the U.S. government’s “Operation Warp Speed” that invested a lot of capital into the private sector while providing regulatory support.

He explains the mRNA vaccine to us: DNA makes RNA, and RNA makes protein. While classically people focused on the protein part when producing vaccines, the process takes too long, and Moderna directly started with the mRNA part. The beauty of mRNA is that one can make it very quickly, give it to the body, and start testing for efficacy.

A key pillar of the mRNA vaccine technology is drug delivery, however. To a patient, the mRNA would get destroyed immediately if not properly encapsulated and protected by nanoparticles when being injected into the body. But once it’s successfully injected into the muscle, mRNA will trigger the body to start making antibodies and immunize the patient.

Wingham Rowan has long been a leader in forecasting the interactions between technology and society. For instance, he created, produced, and presented cyber.cafe, Britain’s longest running TV series about the internet. He also was a presenter on his own program for children, Rowan’s Report. More recently, however, Mr. Rowan has been studying the future of labor and how technology can improve the unpredictable nature of the gig economy. He leads Britain’s Beyond Jobs Project and the international nonprofit, Modern Markets for All. His big ideas about Public Official E-Markets, or POEMs, have been implemented recently in Long Beach, CA to great success.

At its root, POEMs are an effort to bridge the unequal gap between markets used by the upper and lower ends of the economy. Specifically, there are millions of “irregular” workers who cannot work traditionally scheduled hours. These people need jobs, and they can provide valuable labor to businesses. Mr. Rowan believes that everyday workers and small businesses should have access to smart markets, where they can find each other in a way that helps everyone. If the private sector won’t share the ones they use, though, the public sector has an opportunity to step in.

Would it be possible for governments, whether local, state, or national, to establish a system of online labor markets as a public utility? It’s a revolutionary idea. When pitching it, Mr. Rowan often receives pushback, including from us. We dig into the specifics of the system, interrogating where it could have problems and trying to find where its potential could be maximized. POEMs is no “silver bullet solution,” but through our conversation it’s clear that the plan, if properly implemented, can lead to serious positive social good.

Mr. Rowan is driven by a singular mission: to create better markets for gig work, allowing workers and businesses to unlock their entire economic potential. Instead of being at the mercy of an employer’s scheduling, irregular workers can take control and sell their own time through POEMs. Our conversation with him tackles many aspects of the POEMs plan, its possible pitfalls, and the ways it can solve inequality through public policy.

Stephen Roach is a Senior Fellow at Yale’s Jackson Institute for Global Affairs and a Senior Lecturer at Yale’s School of Management, where his research and teaching focus on the impacts of Asia on the global economy. One of Wall Street’s most influential economists, Prof. Roach spent more than 30 years at Morgan Stanley, where he was the Chairman of Morgan Stanley Asia and the bank’s Chief Economist. He has written extensively on globalization, trade policy, and international finance.

Last October, Prof. Roach published an article in the Financial Times titled “The end of the dollar’s exorbitant privilege.” He argues that the dollar could fall as much as 35 percent by the end of 2021. In this interview, Prof. Roach walks us through the reasoning behind his arguments and discusses the economic and political significance of a dollar crash, mainly pointing to two metrics – a decline in domestic savings and an increase in the current account deficit. Domestic savings was at 1.4% of national income in Q1 2020, compared to the 45-year average of ~7%. The current account deficit plunged to -3.5% of GDP in the second quarter, the sharpest quarterly decline on record, and the massive stimulus package will further blow up the deficit.

What are the implications of such a dramatic dollar crash in valuation, both in the U.S. and abroad? How have the current monetary and fiscal policy regimes exacerbated this issue? And is there anything the U.S. can do to prevent the fall of the dollar?

We also touch on another important market trend: the rise of Bitcoin. Despite the cryptocurrency’s increasing popularity and legitimacy among institutional investors and corporations – most notably Elon Musk and Tesla – Prof. Roach is skeptical about its potential as a global currency. We discuss the implications of Bitcoin’s rise and the difficulty of valuing an asset with no traditional fundamentals.

On one hand, Tiger argues that Bitcoin has never been supported by fundamentals but always by narratives and people’s faith in it. As long as the faith for Bitcoin is strong enough, as long as people’s doubt on the dollar and other forms of assets are strong enough, and as long as the hunt for yield continues, Bitcoin’s price will just keep shooting up.

Prof. Roach counter-argues that by definition speculative bubbles do not go on forever; they always burst. When an asset turns into a speculative bubble, that means people are buying the asset just under the expectation that the prices will keep going up. So by definition, it’s an investor play on price appreciation that is detached from the fundamental value of the asset. That detachment can go on for a lot longer than we think, but ultimately it reasserts itself when the price point involved, for reasons that are very different for each asset, gets so far detached that just the slightest, inconsequential shifts can lead to the bursting of the bubble.

Lastly, having spent the bulk of his career on Wall Street, Prof. Roach critiques the Fed’s monetary policy in the past few decades and reflects on his own forecasting career. He addresses the impact of the Fed’s rapid balance sheet expansion, which some argue is inflating prices of financial assets held by the private sector and, in doing so, primarily benefiting the wealthy. Do there exist more equitable ways of stimulating the economy besides Quantitative Easing (QE)? And, if so, what can the Fed do to implement them?

This is a far-reaching conversation beyond mere topics of the dollar dominance, Bitcoin, and the GameStop saga. It’s about piecing together the large macro-financial trends we’ve witnessed in the past few decades and trying to make sense of what might come next.

David Williams serves as the Director of Policy Outreach at Opportunity Insights, a research and public policy lab based at Harvard University dedicated to using big data to improve upward mobility in America. The lab is led by Professors Raj Chetty, John Friedman, and Nathaniel Hendren. David is tasked with supporting research and evidence-based policy change by creating and leading partnerships with communities across the country. Opportunity Insights’ current projects include Creating Moves to Opportunity (CMTO), a national housing mobility initiative, and the Charlotte Opportunity Initiative, a community-wide place-based initiative aimed at improving economic opportunity throughout Charlotte and Mecklenburg County.

With a mission to develop scalable policy solutions that will empower families to rise through poverty, Opportunity Insights adopts a unique lab-based, team-based approach to economic research with a large team of “pre-doctoral” research fellows and policy experts. They believe they’re helping create the future of social sciences research.

After the Covid-19 pandemic hit the U.S., the lab embarked on an ambitious project – tracking and providing real-time economic data. At the heart of political debates happening today is the issue of re-opening the economy. On one side of the debate, some are suggesting that businesses need to open up immediately to stimulate an economy in trouble. However, data from last June provided by Opportunity Insights suggested that lifting state-mandated closing of businesses had no significant effect on economic activity.

Likewise with the similar debate on stimulus checks, Opportunity Insights argued that the reduction of consumer spending associated with Covid-19 was due to supply shocks, not a lack of purchasing power per se. In other words, businesses couldn’t open up, and people weren’t willing to spend more because of the concern for the virus. Raj Chetty recommended expanding the social safety net and extending unemployment benefits as a means to limit hardship among low-income workers rather than an all-encompassing stimulus check, which might not be the best solution to boosting consumer spending.

One of OI’s ongoing projects on social mobility at large is Creating Moves to Opportunity (CMTO), an experiment with the Seattle housing authority. This initiative works to reduce challenges families face when using federal rental assistance to find housing by offering services with the housing search process, help with landlords, security deposits etc. The initiative has shown much success, demonstrating an increase from 14% to 54% in moves to high-upward mobility neighborhoods. One misconception that CMTO’s data overturned is that families live in low-opportunity areas because of differences in rent prices.

Raj Chetty, founding director of Opportunity Insights, has long been praised by many as the most influential applied micro-economist of this generation, especially with his innovation on using big data to study economics and improve upward mobility in America. The sheer vastness of OI’s big data (20 million children in the CMTO project) could lend us nuances that aggregate data cannot. What is the key to using big data to harness economic insights? To put it differently, what is preventing some average data scientist/economist/hedge fund manager with more data to gain more insights on issues like Covid and social mobility than the researchers at OI?

Hunt Allcott is a Senior Principal Researcher at Microsoft Research visiting the Economics Department at Harvard University in 2020-2021. An applied microeconomist who studies topics in behavioral economics, environmental economics, public economics, and industrial organization, Prof. Allcott is also a Co-Editor of the Journal of Public Economics and a Scientific Director of ideas42, a think tank that applies insights from psychology and economics to business and policy design problems.

Prof. Allcott is a leading scholar in the emerging field of behavioral public economics, which asks questions such as: How can we do welfare analysis if choice does not necessarily identify utility? How do we empirically measure consumer bias? How do we set socially optimal policies in the presence of bias? Are nudges a good idea?

Behavioral economics extends the study of public economics in three ways: 1) new welfare implications of standard policies; 2) new policy tools like nudges; and 3) better predictions about how people respond to policy.

One of Prof. Allcott’s recent notable studies is on payday loans, a type of short-term, high-interest loan that is typically due on the borrower’s next payday. Critics of payday lending argue that the practice is predatory and can trap vulnerable borrowers in debt they can’t afford, and a number of laws have been passed over the years to regulate the practice. In Prof. Allcott’s study, he seeks to answer the question of whether or not borrowers act in their own best interest (in which case, restricting payday lending would decrease welfare).

He found that the most inexperienced borrowers underestimate their likelihood of borrowing again, whereas more experienced borrowers are accurate in their prediction of future borrowing – sophistication (the ability to predict future preferences) is gained with experience. Therefore, the truth is likely to be in the middle – that neither an outright ban on payday lending nor an utter lack of regulation would improve consumer welfare. How can policymakers take into account this heterogeneity when developing policy? Is it even possible or optimal to do so?

Another fascinating experiment evaluates behaviorally motivated policy (Allcott and Taubinsky 2015). There are tremendous financial costs saved if one uses CFL (compact fluorescent lamp) light bulbs instead of incandescent ones, but many still purchase a large amount of incandescent ones. What explains this? Does it mean that consumers are biased and don’t know what’s best for themselves? How would one quantify the alleged bias in units of dollars?

This is where the topic of “sin tax” comes into play. To impose any sin tax or regulation, it is implicitly assumed that “consumers are unable to make market decisions that yield personal savings, that the regulator is able to identify these consumer mistakes, and that the regulator should correct economic harm that people do to themselves” (Ted Gayer 2011). A key point in Prof. Allcott’s work, however, is that behavioral public economists try to “debias” imperfectly informed or inattentive consumers; they’re not trying to convince them to buy one kind of product or the other, hence minimizing the “demand effects.”

We end the interview with Prof. Alloctt’s recent work “The Welfare Effects of Social Media,” in which he and Stanford economist Matthew Gentzkow and others attempt to show how Facebook can impact well-being negatively, both socially and individually. Surveyed subjects were more likely to reduce their awareness of and attention to politics and be less polarized when they’re cut off from social media. It is interesting to note that participants were being paid to temporarily leave Facebook, and many asked for high prices that wouldn’t be sustainable in the long run.

Dave Wasserman is the House Editor for The Cook Political Report, a nonpartisan polling and elections forecasting group. Before joining The Cook Political Report, Dave worked as the House Editor for another widely respected polling and elections forecasting firm, Sabato’s Crystal Ball.

At The Cook Political Report, Wasserman is known as one of the nation’s prominent election forecasters. He successfully forecasted the 2016 and 2018 elections, accurately suggesting that Donald Trump may win the presidency while losing the popular vote. He is actively involved in examining House races, using individual districts to key in on larger electoral trends. He collaborated with FiveThirtyEight to produce the groundbreaking “Atlas of Redistricting,” which models redistricting and gerrymandering scenarios for all fifty states.

It’s a rare opportunity to have a preeminent forecaster like Dave on the show to discuss several important topics just as the elections season came to its long-awaited end. To start, we tackled the 2020 Presidential Election, trying to understand why the polls were off yet again. Dave was quite frank with us, stating that he and other elections forecasters relied too heavily on what he calls “spreadsheet crunching.”

For reference, The Cook Political Report, as opposed to FiveThirtyEight and The Economist’s elections forecasting team, is a traditional elections forecaster relying on conventional wisdom. With the rise of data-driven forecasting, Dave argues that pollsters lost track of some tried-and-true political knowledge: the strength of incumbents, the ebbs and flows of political trends that caused voters who voted for Congressional Democrats to rebuke Trump in 2018 to split their tickets, and the polling blind spots for the incredible turnout from white, non-college educated voters.

That is not to say data doesn’t matter at all. We also discussed the data of key demographic shifts — the Democratic Party’s inroads in key suburban areas and their bleeding from the blue-collar union areas that formed the dominant New Deal coalition for much of the 1950s and 1960s.

In addition, Dave argues that because of the growth of data and accessibility to data in politics, the general public has become more attuned to processes like redistricting and voting rights issues, which may buffer the gerrymandering that will happen due to Republican control of state legislatures.

However, Dave is quite pessimistic about disinformation, polarization, and their consequences on electoral politics. He’s quite bearish on Democrats’ chances to hold Congress in 2022, even though he feels Georgia and Arizona have shifted favorably for them. He worries about the consequences of the rampant disinformation on the trust in future elections, and while he sees a depolarization across race and geography in the country, he sees disinformation and irresponsible practices from Beltway media as means of worsening the divide between urban and rural America.

In our interview, we give an unfiltered look at the state of electoral democracy on both the micro and macro levels with one of the nation’s premier forecasters. For more of our previous discussions on election forecasting, you may be interested in listening to the episode “Is Nate Silver Worse than Crackhead Jim? The Success and Tautology of Election Forecasting” and read our essay on Bayesian forecasting in elections.

Steven Kelts is a Lecturer at Princeton University’s Politics Department and University Center for Human Values. A historian of political thought, he is now teaching a seminar titled “Money, Markets, and Morals.” In this interview, Prof. Kelts explains the recent saga of GameStop trades, its connections with historical market fluctuations, and the important normative considerations about market fairness and regulation posed by great intellectuals like John Locke, Bertrand Harcourt, Milton Friedman, and Karl Polanyi.

r/WallStreetBets, a forum hosted on Reddit that is described as 4chan meeting Bloomberg Terminal, was the birthplace of the Gamestop Short Squeeze. What started off as a brilliant way of organizing retail traders to drive up stock prices quickly evolved into a nation-wide political debate posed as a “proletariat revolution” by retail traders against the Wall Street establishment.

We trace all the way back to works by John Locke and the Medieval times when identifiable features of modern markets began to emerge. Prof. Kelts explains why our current way of understanding the market is a new invention. Even though the ballooning of credit and finance is a more recent invention, it is questionable whether markets have indeed become more "free" now than in the past, even though we’re constantly told so.

Prof. Kelts explains to us that markets have not always been thought of in the way they are by neo-classical economists like Milton Friedman or neoliberals like Gary Becker. To think of markets in that way (self-regulating, almost natural, and “functioning best when they are regulated least”) is a choice, and it may not capture the actual practices of market exchange any better (or worse) than a scholastic thinker of the late 1500’s would have captured actual practices.

The Gamestop incident generates questions on the moral foundations of market structures. It helps to point out that even if people today harbor some notion that a market is structured around individual choice, they do so because they think that gives life to a norm of fairness.

People would be appalled if the clearinghouses (as individual businesses) made deals with the hedge funds (as individual businesses) to stop processing orders for “meme stocks” like GameStop. But as in 2008, they also would be appalled if the clearinghouses had extremely low capital requirements for meeting margin calls, essentially allowing players like Robinhood to make uncovered bets and expose us all to systemic risk. So what people want, as Prof. Kelts argues, is a market that’s regulated in the right way, oriented towards fairness to all market participants – not an unregulated market. Nevertheless, it turns out that creating a regulated market also creates all sorts of quirks and oddities within the market, like the capitalization requirements that tripped up the GameStop traders.

What Prof. Kelts finds most interesting about GameStop are the puzzles people now raise about why markets are structured in the way that they are. People assume that markets are structured around some sort of unfettered choice to exchange individually; and he wants his work to demonstrate that this idea of markets is a very modern, and perhaps unrealistic, conceptualization of what a market really is.

This is a far-reaching conversation that touches on many fundamental issues in political theory and the history of political thought. We hope to show you that while the GameStop incident may seem novel and shocking, it is also an old tale of self-regulating markets. It should not change our faith that markets will hold just fine.