Great Professors: Meir Kohn

The Dartmouth Review (TDR): Once every two years you give a consistently well-received talk on how you became a Libertarian, which is really your life story through the lens of political experiences. In a cliff notes summary, how did you become a libertarian?

Meir Kohn (MK): I started off as a socialist. As a teenager I went off to a kibbutz in Israel and experienced socialism. It was a very benign form of socialism, not like the Soviet Union. It was voluntary: you could leave anytime. It was very small scale socialism. But even then I was disillusioned. For example, people sometimes think that money is the root of all evil and inequality. I found on the kibbutz that there was very little inequality between people. We all pretty much had the same things. But, as differences between people decrease, the human capacity to see differences increases. People were just as upset if someone had more, maybe even more so, because things were usually allocated rather than earned. So that was part one.

So I left the kibbutz and started studying economics. I was a progressive then because economics led me into that direction. The second and third parts of my story taught me what was wrong with progressivism, and left me by default as a libertarian. I now want to see government contained rather than have expansive involvement. The second part is my teaching of ECON 26, the study of financial systems. It deals specifically with the American financial system, which is characterized by a large amount of government intervention, presumably to make things better. It is pretty obvious, without going into the details, that government intervention uniformly makes things worse. It is partly because we don’t know how to make things truly better, and government actions have unintended consequences. The other issue is that once government gets involved it becomes political: there is influence and corruption. The result of government intervention here has been to create one of the most unstable financial systems in the world.  The United States is characterized by both a large amount of intervention and instability. So that was part two. The idea that the government is there to help you, knows what to do, and can make things better – that taught me otherwise.

The third part was my research, where, without going into details, I unusually but not uniquely had to study government rather thoroughly. I was trying to develop a theory of economic progress, and the role of government in that was very important. I took an economic view so that I could study and try to understand it. If you told someone even 150 years ago that government was there to help, they would have laughed. That is a very modern idea. In the past, the government was there to help the rulers, not the people. So my research disabused me of this notion that the government was a natural instrument for improving things. By default, and empirically, I am a libertarian.

MEIR KOHN the economics legend (Courtesy of the Dartmouth Economics Department).

MEIR KOHN the economics legend (Courtesy of the Dartmouth Economics Department).

TDR:  How has that intellectual journey influenced your scholarly work?

MK: It’s sent me in fairly unconventional directions. Throughout my career I’ve been more interested in the things that economics should be talking about but doesn’t, why it doesn’t, and what we can do to explain those things. I have generally not been very good at blindly buying into things, even things that sound good initially. I try to question and come to my own conclusions.

TDR: What do you consider to be your most significant intellectual contribution to economics?

MK: I spent most of my years as a mathematical theorist, and that was kind of a waste of time. I did a bit of history of economic thought, trying to understand where we went wrong. Not for its own sake, but for the sake of trying to retrace our steps. I wrote a paper, “The Value of Exchange,” which I am very proud of. It identifies where, how, and why economics went wrong. The other big thing is the project I’ve been working on, which is a book that I am close to finishing. I don’t know how it is going to be received. The economics profession is not primed to receive this kind of thing. But I’m pleased with it. I think I have gotten the answers to my questions.

TDR: What can you tell us about your book?

MK: It is something that I stumbled into by accident. One thing led to another. What it wound up being was an attempt at developing a new framework of understanding economic progress, a topic where the field of economics is particularly bad. Beyond that, I think it puts forward a great framework for economics. It is a new kind of economics, and it combines new and old. It has a lot in common with classical economics, and Austrian economics to some extent.

TDR: Economics 26 has become your signature class. It is completely different than anything else in a Dartmouth experience. What is your teaching philosophy for the course?

MK: Partly by accident, I experimented in other classes with doing this sort of thing. I taught econometrics for example. That class had two lectures every week and an assignment discussing empirical work. I had experimented with the idea, so when I wrote a textbook for ECON 26, which essentially used my lecture notes, I thought it was idiotic to spend all that time lecturing when you could just read the book. I don’t need to recite it in class. Let’s do all the class in the Socratic method. I was really happy with the result. The class was much better, and the method made more sense to me. My philosophy is that if you are going to have a live professor with you, rather than watching a video, you need to have interaction. Otherwise you don’t need the guy, you can watch it online. How I see it, as it has matured, is that what I’m really trying to do is not to teach answers, or material, or facts. What I’m trying to do is to get people to internalize questions. They will then be primed to ask questions about other material.

TDR: How has the course changed over the years?

MK: Only some minor changes. I did something new for the first time this year. Most people seem to adjust well to the class. It is a bit scary in the beginning, but within a few classes it is comfortable. But some people don’t adjust. The first thing I did this term when I introduced the class was that I said “if you are really having trouble, come talk to me and maybe we can make you more comfortable.” I did that, somebody came, and it has been very good. It is good to address these things rather than just leaving them there.

TDR: Did the class change at all with the financial crisis?

MK: No. That was the surprise to me actually. When It all happened I thought “oh dear, a lot of the stuff is going to have to change.” But I found that I had anticipated a lot of the key parts of the crisis. Not the facts, but the ways of thinking. Take subprime mortgages for example, the absolute center of things. When I wrote the book, I was barely aware of them. They did exist but were not a big thing. It was really after the book, after 2003, that they ballooned and exploded. I did talk about securitization and mortgages, and I had an assignment where I suggested the possibility of securitizing small business loans. When you think about if this is a good idea and whether it will work, you can actually substitute subprime loans for business loans and come to the same conclusions.

TDR: Like you said, the goal of the course is to provide us with ways of thinking to approach problems in the future, which is very different than a lot of courses. I think you succeeded in your goal.

MK: I mean it works. It definitely works. It’s sort of hidden, and I don’t tell you explicitly what to do. I’m not making a speech: “think this way!” We’re going through and discussing things. Actually, both my sons taught English to executives in Belgium. And they learn a method of teaching a foreign language, and the method is quite good. You have a conversation with a high power executive–normally at a beer company–and when someone makes a mistake in the language, you don’t correct them. But as you’re speaking subsequently, you show them the right way of doing it. You don’t say you’re doing that. They’re smart enough they’ll make the connection. But you do it the right way after, and they notice that. So it’s the same kind of thing in my style of teaching, where you do it without explicitly saying you’re doing it.

TDR: What do you believe to be the purpose of education? Given that students only have four years at Dartmouth, what’s the best way to make the most of it?

MK: I have never been a big fan of the liberal arts. I grew up in England, and I went to school in Israel and taught there. And the idea in both places is that you go to college to learn a subject, so in England you go to read Economics or to read Chemistry or some other subject. It’s not a general education. You’re learning specific skills that presumably will provide you with a way of making a living. I like that idea. I tend to see students that very much think along those lines—self-selection obviously. They’re also taking computer science, they’re taking engineering, they’re taking economics, and they’re taking humanities less and less–as much as they have to but not much more. When I think of education, I think of it as the acquiring of skills. Basically you’re learning to do something that will enable you to make a living.

TDR: If you had to take another course at Dartmouth, what would it be?

MK: Other than mine? I’m not that familiar. In Economics there are a bunch of courses that are quite good. Outside of Economics, I know Paul Christesen in Classics. He’s really good. I would take his class.

TDR: What books have been particularly interesting to you? And again, you can’t choose any of yours.

MK: There are a bunch, but the one we’re doing in our reading group, Jane Jacob’s The Economy of Cities, has been a real eye opener for me. Early on, a book that had a big effect on me was Galbraith’s Affluent Society. Later, when I studied it and thought about it more carefully, I realized that it actually wasn’t such a great book. But the thing that I found was a real eye opener and pushed me in the direction that I went was that Galbraith was talking about things that I thought were very important and interesting. I think he got a lot of things wrong in retrospect. But it was stuff you should have been able to talk about economics, but couldn’t. You didn’t have the language. That was the first occasion where I thought that there’s something wrong with economics if we can’t discuss these obviously important economic issues.

TDR: What is something you uniquely believe in?

MK: I think my views about economics are unusual. I think relatively few economists agree with me. But I wouldn’t want to believe in things that nobody else believes in. Maybe Einstein could get away with it, but that’s very rare. You want to have a different version or refinement. You want to say something new, but if it’s totally new that’s not a good sign. That means it’s either crazy or you’re Albert Einstein, and I have no pretensions.

TDR: Many people think that we are living in a period of misinformation and deception. If you could set the record straight in one area, what would it be?

MK: The effects of free trade. I think that story is badly misunderstood. The correct view is that expansion of the market, free trade, has enormously beneficial economic effects. It creates those effects by disrupting things. The disruption it causes isn’t a bug. You hear “free trade is good, but it causes disruption”–– no. It’s only good because it causes disruption! It moves people out of things that are less productive into things that are more productive and causes us to reorganize things in new ways that are more productive. The recent problem with free trade and the unhappiness it has caused so many people is because that necessary adjustment has been made much more difficult than it needs to be. So the problem is not that we’re open to free trade or that it’s disruptive. It’s that there are now huge impediments to the adjustments people need to make in response to free trade, and those impediments come universally from government. Not just the federal government, but state and local government too.  If you lose a job, you want to move somewhere where there are jobs. So the federal government has this program to help you buy a home. Now as the industry you work in has gone down the tubes, the value of your home has gone down the tubes. If you had been renting you could just pick up and move, so that’s one thing that reduces mobility. Suppose you were lucky and were renting, and you want to go somewhere where there are jobs. You can’t afford to live there, because of restrictive zoning and environmental protections and all these kinds of things. In the places there are jobs, there isn’t enough building and housing is therefore incredibly expensive. So you’re stuck. You can’t move to where the jobs are. So you’re going to stay where you are but are going to go into a different line of work. Uh, not so easy, because the state imposes licensing requirements. Typically, there used to be five or so professions in a state for which you needed a license. Now there are something like fifty. So if you want to do people’s hair, you have to do two years of school to study the physiology of hair. The reason is just monopoly, what’s called rent-seeking. The current hairdressers don’t want competition, they make nice contributions to the politicians and the politicians impose licensing requirements. Ok so this poor guy or gal lost his or her job because of trade; what are we going to do about it? We’re going put them on welfare. This will totally destroy their lives. All the incentives they had to find a new job just vanish. I remember something that happened when I came to the United States in 1970 to go to graduate school: I was watching the news on television, and foreign competition, maybe it was Japanese then, had caused some American steel plants to close down. They were interviewing workers as they came out of the plant, and it made a tremendous impression on me. They asked one of the workers: “what are you going to do now?” And the man said “Well I’ve got unemployment for six months, and I guess after that I’ll start looking for a job.” And what was the government’s response when people remained unemployed after the six months? They extended it! And meanwhile you’re making these people’s lives miserable. That guy who’s sitting there for six months doing nothing, it’s not as if he’s going to be happy. Do you actually want to help him? Give him a lump sum! So that way he’ll have every incentive to go out and look for work. So it’s not impossible to fix, it’s really easy to fix.

TDR: Speaking to someone who has been here for 40 years, we would love to know your fondest memories of Dartmouth.

MK: Just sometimes when I see former students or they send me an email and they say “Wow! I’m still using that stuff. It really made a huge difference.” Anything like that, when we see that what we’re doing is really making a difference. It’s nice and gratifying. So what’s the best part of Dartmouth? The studen-ts!