What This Episode Is About
Some competition fails not because it isn’t competitive enough, but precisely because it is fairer, freer, and more thorough—making the outcome worse instead.
In this episode, I take you through The Darwin Economy: Liberty, Competition, and the Common Good by Robert H. Frank, a professor of economics at Cornell University. Frank is best known for his mega-bestseller The Economic Naturalist, but he himself considers The Darwin Economy his most important work. For a market liberal like me, whose backside is always tilted a little to the right, this is also a genuinely convincing book of left-wing economics.
Frank points out that there are actually two kinds of competition. One is the Adam Smith-style competition we’re familiar with: if you want to make money, you have to produce better products, cut costs, and improve efficiency, making other people better off as a side effect of pursuing your own interests. The other is the Darwinian competition this book focuses on: it doesn’t ask how much real value you create, only where you rank compared with everyone else. That’s how stags’ antlers keep getting bigger through competition, until they become so large that elk have trouble moving through the forest and are easier for predators to catch. But no single stag can make its antlers smaller on its own, because it would lose mating rights first.
This competition over “whose antlers are bigger” is everywhere in human society—parents scramble for homes in the right school districts, workers take greater risks for higher pay. In the end, housing prices rise, but relative rankings stay exactly where they were. Everyone’s choice is rational; put together, they improve nobody’s position and merely consume more money, time, and life.
What’s unusual is that Frank doesn’t simply end up siding with the traditional left. He poses a brutally practical challenge to people who criticize markets: Is there money on the table? If a system could truly make everyone better off, it would be a money-printing machine. Capitalists wouldn’t need a change of heart; greed would be enough—so why hasn’t it replaced traditional businesses in the market? A lot of anti-market arguments can’t get past this test. Darwinian competition is the exception: there is no money on the table that any one person can pick up alone.
So the episode keeps asking: Are workplace-safety regulations, school-entry ages, and mandatory savings experts making decisions for you—or are they collective ceasefire agreements that everyone wants but nobody can sign individually? Why is Frank’s central proposal a progressive consumption tax rather than a progressive income tax? Why does he think taxes are gentler than bans? Market liberals use Coase’s noisy candy factory case to argue that the government needn’t intervene, so why does Frank say it breaks down in the face of Darwinian competition? And finally, in the great-flood thought experiment: why might someone who absolutely loathes government, after adding up every cost, choose a society that retains taxes and regulations after all?
Highlights
- The dividing line between two kinds of competition: Smithian competition creates value; Darwinian competition fights only over relative rank, and the freer it is, the worse things get
- “Is there money on the table?”: an economic litmus test for both traditional left-wing proposals and Darwinian market failure
- From hockey helmets to school-entry ages, rules that seem annoyingly meddlesome are actually collective ceasefire agreements nobody can negotiate
- Why a progressive consumption tax beats an income tax and a luxury-goods tax: no need to define luxury goods, no punishment for success, and a lower comparison benchmark for society as a whole
- The limits of Coasean bargaining—and whether the slogan “It’s my money” still holds up in an age when the winner takes all
Jump to a section
- 00:00 A left-wing economics book that can convince a market liberal
- 02:03 Elk antlers: What is Darwinian competition?
- 03:33 School-district housing and dangerous jobs: the arms race of human society
- 04:37 Is there money on the table? Why Frank doesn’t side with the traditional left
- 07:59 Workplace safety and hockey helmets: regulation as a collective ceasefire agreement
- 11:59 Positional consumption: the severely overlooked waste of society
- 14:48 Progressive consumption tax: putting the invisible beast on a diet
- 17:37 Why taxes are gentler than bans: pollution control and congestion charges
- 20:17 The limits of social engineering: Coase and the noise from the candy factory
- 25:00 It’s my money: high incomes in an age when the winner takes all
- 27:43 The great-flood thought experiment: What freedom really is
- 29:48 A Smithian problem, or a Darwinian problem?
The Book
- Title: The Darwin Economy: Liberty, Competition, and the Common Good
- Author: Robert H. Frank
- Publisher: Princeton University Press
- Year published: 2011
- ISBN：9780691153193
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