Are prediction markets (PMs) immoral or dangerous? What about retrodiction markets? What would Adam Smith or F. A. Hayek say? Below are some anti-PM links:
Celebrating 15 years of Incidental Comics! Here's a page from 2012 about my creative process. My methods haven't changed much since then… pic.twitter.com/RVO1Xpd8Hv
More generally, is “good faith” more like a rule (e.g. a speed limit or “no smoking” sign), or is it more like a standard (e.g. “fair use” or “be careful”)? Or does the meaning of good faith depend on purely subjective or idiosyncratic factors (e.g. “I know it when I see it”)? My favorite paper thus far at this year’s ALSB (Academy of Legal Studies in Business) conference in Minneapolis has been “Statutory Good Faith and its Continuum of Definitions, Rules, and Standards” by my colleague and friend David Orozco (Florida State), who presents several competing definitions of “good faith” along a sliding-scale or continuum.
Evolvable AI or “eAI” refers to artificial intelligence systems that can autonomously create copies of themselves, pass on heritable traits, and undergo some form of natural selection, e.g. random mutation, recombination, and survival of the fittest. Some AI researchers claim that eAI poses a serious threat to humanity. See Victor Müller, et al., Evolvable AI: Threats of a new major transition in evolution, PNAS (20 April 2026)? Others dispute that claim. See, for example, Maarten Boudry, Domesticated, not feral: Why evolvable AI is not yet a Darwinian threat, PNAS (2 July 2026)? So, who’s right? And if it’s too soon to say who’s right, then what?
Is it possible to tame the A.I. beast in higher ed? I am a college professor who sees the handwriting on the wall: it’s only a matter of time before university administrators begin using “A.I. tools” to replace costly faculty. Although resistance is probably futile at this stage, some law school faculties in the U.S. are now starting to fight back by restricting the use of new technologies like “generative A.I.” in the classroom. (See here, for example.) Is this a lost cause or the start of a counter-revolution in higher ed?
Is Darth Vader a stand-in for OpenAI or for law school deans?
I have returned from my travels in Costa Rica (family vacation) and North Texas (among other highlights, my daughter Adys and I saw the semi-final match between France and Spain at Dallas Stadium) to attend the annual conference of the Academy of Legal Studies in Business (ALSB). This year, the ALSB will take place at “The Depot”, a historic hotel and former train station (pictured below) in the Mill District of downtown Minneapolis, where I will be staying until the end of this week (July 20-23).
I will therefore resume — and conclude! — my multi-part review of Adam Smith’s 1784 pamphlet, Additions and Corrections to the First and Second Editions of Dr. Adam Smith’s Inquiry into the Nature and Causes of the Wealth of Nations, next week (July 27-31). In the meantime, I will be meeting with friends and colleagues as well as presenting two of my forthcoming papers at the ALSB: “Buchanan v. Samuels: The Cedar Rust Case Redux” (on Tuesday, July 21) and “Stoic Capitalism? Adam Smith versus Marcus Aurelius” (on Wednesday, July 22).
Does it get any better than this? La Furia Roja vs. La Albiceleste! Lamine Yamal vs. Lionel Messi Messi! To celebrate today’s historic World Cup championship match between Spain and Argentina, I am posting this Spanish language remix of K’NAAN’s “Wavin’ Flag” featuring David Bisbal.
Thus far this past week (see here, here, here, here, and here), we have done a deep dive into paragraphs 1 to 53 of Part #12 of the pamphlet “Additions and Corrections to the First and Second Editions of Dr. Adam Smith’s Inquiry into the Nature and Causes of the Wealth of Nations” (Smith 1784, pp. 23-46). But I have saved the best for last: the closing paragraph of Part #12 (paragraph 54). It is here, in this concluding paragraph to Part #12 of his 1784 pamphlet, that Adam Smith pulls back the green curtain, so to speak — like Dorothy’s dog Toto in The Wizard of Oz — to reveal the true villains of his story:
“It cannot be very difficult to determine who have been the contrivers of this whole mercantile system; not the consumers, we may believe, whose interest has been entirely neglected; but the producers, whose interest has been so carefully attended to; and among this latter class our merchants and manufacturers have been by far the principal architects. In the mercantile regulations, which have been taken notice of in this chapter, the interest of our manufacturers has been most peculiarly attended to; and the interest, not so much of the consumers, as that of some other sets of producers, has been sacrificed to it.” (Smith 1784, p. 47)
On this note, compare the “Big Tech” firms of today, such as Apple, Google, Meta/Facebook, Microsoft, and OpenAI, to the evil economic “contrivers” of Smith’s day. Plus ça change, plus c’est la même chose!
But how is such a small group of nefarious “contrivers” — past and present — able to manipulate the legal system to put their private economic and legal interests ahead of those of the great majority of the public: consumers? Whatever happened to the consequentialist notion of “the greatest good for the greatest number”?
As it happens, Adam Smith anticipates Mancur Olson’s Logic of Collective Action by two centuries. Buried deep in his discussion of the wool market in England (see paragraph 34 on pp. 38-39 of Smith’s 1784 pamphlet), the Scottish scholar compares and contrasts cattle ranchers and sheep farmers (“graziers”) on the one hand with the manufacturers of leather and woollen goods on the other:
“Graziers separated from one another, and dispersed through all the different corners of the country, cannot, without great difficulty, combine together for the purpose either of imposing monopolies upon their fellow citizens, or of exempting themselves from such as may have been imposed upon them by other people. Manufacturers of all kinds, collected together in numerous bodies in all great cities, easily can.” (Smith 1784, p. 38)
In other words, there is a market for political and legal favors just like there is a market for ordinary goods like wool, leather, and meat. Large and diffuse majorities — whether they be cattle ranchers, sheep farmers, or consumers — are unable to effectively band together to lobby the government to protect their interests because they are spatially dispersed across the country. (Implicit in the passage above is what Mancur Olson makes explicit: when a group is large and dispersed, the benefits to any individual member of the group of lobbying the government are small relative to the costs of banding together.) Small and geographically-concentrated groups, by contrast, are another story. They can more easily organize and band together than large and diffuse majorities can because the financial rewards for them are large. Simply put, the costs of banding together for small and concentrated groups are worth it.
Nota bene: I will be taking next week off, but starting on Monday, 27 July, I will turn my attention to the last separate substantive section of Smith’s 1784 pamphlet: Part #13.
Adam Smith concludes Part #12 of his 1784 pamphlet (paragraphs 49 to 54 on pp. 45-47) with a series of timeless observations that are worth quoting in full. First and foremost (para. 49), Smith puts his cards on the table:
“Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer.” (Smith 1784, p. 45, my emphasis)
In other words, the economy should serve the people who buy goods, not the firms who make goods. Furthermore, Smith elevates this general principle into an economic axiom: “Th[is] maxim is so perfectly self-evident that it would be absurd to attempt to prove it.” (Id.)
But in light of his comprehensive survey of Britain’s protectionist laws (see, for example, my previous posts from this week), Smith concludes that “the mercantile system” inverts this “perfectly self-evident” axiom in the most perverse way imaginable. (See the rest of para. 49 as well as paras. 50 & 51.) Or in the immortal words of Adam Smith:
“But in the mercantile system the interest of the consumer is almost constantly sacrificed to that of the producer; and it seems to consider production, and not consumption, as the ultimate end and object of all industry and commerce.
“In the restraints upon the importation of all foreign commodities which can come into competition with those of our own growth or manufacture, the interest of the home-consumer is evidently sacrificed to that of the producer. It is altogether for the benefit of the latter that the former is obliged to pay that enhancement of price which this monopoly almost always occasions.
“It is altogether for the benefit of the producer that bounties are granted upon the exportation of some of his productions. The home-consumer is obliged to pay, first, the tax which is necessary for paying the bounty, and secondly, the still greater tax which necessarily arises from the enhancement of the price of the commodity in the home market.” (Id.)
Smith then dons his historian’s cap to provide a specific example of this perverse mercantile inversion (para. 52), the 1703 Methuen Treaty between England and Portugal:
“By the famous treaty of commerce with Portugal, the consumer is prevented by high duties from purchasing of a neighbouring country a commodity which our own climate does not produce, but is obliged to purchase it of a distant country, though it is acknowledged that the commodity of the distant country is of a worse quality than that of the near one. The home-consumer is obliged to submit to this inconveniency in order that the producer may import into the distant country some of his productions upon more advantageous terms than he would otherwise have been allowed to do. The consumer, too, is obliged to pay whatever enhancement in the price if those very productions this forced exportation may occasion in the home market.” (Id. at p. 46)
Next (para. 53), Smith not only unleashes another powerful barrage against British mercantilism (cf. his 26 October 1780 letter to Andreas Holt, where Smith describes the first two editions of The Wealth of Nation as “the very violent attack I had made upon the whole commercial system of Great Britain”); he launches a frontal assault against the pro-business logic of British colonialism. Smith’s attack against colonialism is so sweeping that it is worth quoting in full:
“But in the system of laws which has been established for the management of our American and West Indian colonies, the interest of the home-consumer has been sacrificed to that of the producer with a more extravagant profusion than in all our other commercial regulations. A great empire has been established for the sole purpose of raising up a nation of customers who should be obliged to buy from the shops of our different producers all the goods with which these could supply them. For the sake of that little enhancement of price which this monopoly might afford our producers, the home-consumers have been burdened with the whole expence of maintaining and defending that empire. For this purpose, and for this purpose only, in the two last wars, more than two hundred millions have been spent, and a new debt of more than a hundred and seventy millions has been contracted over and above all that had been expended for the same purpose in former wars. The interest of this debt alone is not only greater than the whole extraordinary profit which it ever could be pretended was made by the monopoly of the colony trade, but than the whole value of that trade, or than the whole value of the goods which at an average have been annually exported to the colonies.” (Id.)
But Smith saves his best for last (para. 54)! He identifies the “contrivers of this whole mercantile system”, the economic and political swindlers for whose benefit this perverse colonial/mercantile system was erected and is still kept in place. Stay tuned, for we will reveal these con men by name in my post! (To be continued …)
As I mentioned in a previous post (see here), Adam Smith surveys a wide variety of British mercantilist laws in Part #12 of his 1784 pamphlet, but he devotes most of his time and energy here to wool (see paragraphs 17 to 32 on pp. 29-38) and to artisans (see paragraphs 44 to 48 on pp. 43-45). We saw Smith’s critique of Britain’s ban on wool exports in yesterday’s post. Today, we will not only examine his substantive critique of the restrictions on artisans; we will also see another side of the Scottish scholar-cum-customs commissioner — what I like to call the sarcastic Adam Smith — for Smith’s sarcasm will be on full display in this part of his work.
To begin, Smith makes the following general point in paragraph 43 of Part #12: “The exportation … of the instruments of trade, properly so called, is commonly restrained, not by high duties, but by absolute prohibitions.” (Smith 1784, p. 43, my emphasis) Then, in the very next paragraph, Smith makes the following wry but witty observation:
“When such heavy penalties [are] imposed upon the exportation of the dead instruments of trade, it could not well be expected that the living instrument, the artificer, should be allowed to go free.” (Id.)
Here, Smith surveys two British laws restricting the free movement of artisans to other countries. (See paragraphs 44 to 46 on pp. 43-44 of Smith’s 1784 pamphlet.) In summary, the goal of these laws was to prohibit skilled workers or “artificers” from leaving the country. For example, if anyone tricked or enticed an artisan to teach his trade in another country, the trickster or enticer could be punished with a large fine and imprisonment.
After completing his survey of these onerous laws — and showing how the penalties in these measures became much more strict over time — Adam Smith makes the following scathing remark (para. 47):
“It is unnecessary, I imagine, to observe how contrary such regulations are to the boasted liberty of the subject, of which we affect to be so very jealous; but which, in this case, is so plainly sacrificed to the futile interests of our merchants and manufacturers.” (Smith 1784, p. 44)
Smith’s sarcastic reference to the “boasted liberty” of Bristish subjects is pure gold, but Smith is not just denouncing the patent unfairness of these restrictions on artisans. As I read this passage (para. 47), he is also, perhaps unwittingly, making a much more deeper and profound point about the relationship between law and liberty. A law that restricts the ability of artisans to work overseas, by definition, restricts their liberty, i.e. their freedom of choice. But the same thing can be said about any law more generally, for all laws limit our liberties by restraining our freedom of choice, telling what we can or cannot do.
Furthermore, what Smith is sarcastically objecting to here is not just the substance of the restrictions on the liberty of artisans or the scale of the penalties. What most angers Smith is how the fundamental natural rights of artisans are literally being “sacrificed” on the economic altar of the “futile interests” of the merchants and manufacturers who lobbied for these laws in the first place.
But Smith saves his sarcastic best for last (paragraph 48) to describe the supposed “laudable motive” of these restrictions:
“The laudable motive of all these regulations is to extend our own manufactures, not by their own improvement, but by the depression of those of all our neighbours, and by putting an end, as much as possible, to the troublesome competition of such odious and disagreeable rivals. Our master manufacturers think it reasonable that they themselves should have the monopoly of the ingenuity of all their countrymen. Though by restraining, in some trades, the number of apprentices which can be employed at one time, and by imposing the necessity of a long apprenticeship in all trades, they endeavour, all of them, to confine the knowledge of their respective employments to as small a number as possible; they are unwilling, however, that any part of this small number should go abroad to instruct foreigners.” (Smith 1784, pp. 44-45)
After denouncing these restrictions on artisans, Smith concludes Part #12 of his pamphlet with some timeless observations about “the mercantile system” overall. More specifically, cui bono? Who benefits from mercantilism? And who are its biggest losers? (To be continued …)
prior probability 