Podcast Summary
The presidency is more complex than a CEO role: The presidency involves dealing with Congress, the media, and a divided system of powers, making policy implementation more complex and time-consuming.
While the President of the United States holds significant symbolic power and the ability to persuade, the actual ability to implement policies and get things done is greatly influenced by the political system and external factors. The powers are divided among the legislative, judicial, and executive branches, and the president must deal with Congress and the media, making the process of implementing policies much more complex and time-consuming compared to a CEO in the private sector. Despite this, the presidency is still a powerful position with a great deal of influence and importance.
Circumstances and personality shape a president's power: Presidents with challenging circumstances and strong personalities can make significant changes, while those with favorable circumstances and weak personalities may face challenges in getting things done. Persuasive abilities and determination are key to overcoming obstacles and passing important legislation.
Both the circumstances and the personality of a president shape their power. Presidents like Franklin D. Roosevelt and George W. Bush, who faced dramatic circumstances such as the Great Depression and war or a terrorist attack, were able to accomplish significant changes. However, even presidents with favorable circumstances and strong personalities, like Gerald Ford, can face challenges in getting things done, as he was unable to secure additional funds to potentially save lives during the end of the Vietnam War. Additionally, presidents like Lyndon B. Johnson, who faced significant challenges like the Vietnam War, were able to use their persuasive abilities and determination to pass important legislation, such as civil rights legislation. Ultimately, the power of a leader lies in their ability to navigate both the circumstances they face and their own abilities to persuade and lead.
President's impact on economy is limited: The President's influence on the economy is minimal as 98% operates independently, despite high expectations for change.
While the President of the United States can set the tone for the nation, their impact on the macro economy is limited, as approximately 98% of the economy operates independently of Washington. Despite high expectations for President Obama's ability to make significant changes, economist Steve Levitt, a close friend and co-author of the speaker, was surprised by the rancorous tone of the political debates and the lack of a transformative effect from the Obama administration. Even someone as influential as Austin Goolsbee, a professor at the University of Chicago Booth School of Business and former chair of the Council of Economic Advisors, acknowledges that the president has limited power to directly impact the economy.
President's Influence on Economy Overestimated: Study during 2004 election found minimal impact of president on stock market, suggesting less control over economy than commonly thought
The influence of the president on the economy might be overestimated. Economist Justin Wolfers conducted a study during the 2004 presidential election, where he compared the financial markets' performance during the hours when John Kerry was mistakenly believed to be the president to the hours before and after this misconception. The results showed a minimal effect, approximately 1.5% to 2%, on the stock market. This finding suggests that the president may not hold as much power over the economy as commonly believed. Despite this, the stock market's reaction still indicates that market participants believe that certain presidents are better for their investments than others. Harry S. Truman, who was a president with an eventful tenure, is an example of a leader who didn't always get his way. In the end, the world might function similarly even without a president.
The President's Role is More Like the Wizard of Oz: The President's influence is mainly in setting direction and image, while day-to-day operations continue independently in a democratic republic system.
Despite the president's significant powers as commander-in-chief, appointer of key personnel, decider of which laws to enforce, persuader of Congress, and negotiator with foreign countries, the role of the president is more akin to the Wizard of Oz than a puppet master. The president's influence is largely in setting the direction and image, while much of the day-to-day operations continue regardless. This is reflective of the democratic republic system, where power is distributed among various branches and entities. The president's role is important, but not as all-encompassing as the leader of the free world rhetoric might suggest.
The Attribution Error in Baseball and Politics: The attribution error occurs when we overattribute outcomes to a single cause, leading to incorrect assumptions and decisions in various aspects of life, including politics and sports.
Attribution errors, the tendency to overattribute outcomes to a single cause, and the illusion of control are common in various aspects of life, including politics and sports. Bill James, a baseball scholar, used the example of pitchers in baseball to illustrate this concept. He argued that the belief that baseball is 75% pitching is due to the attribution of wins and losses to pitchers, creating a tautology that the pitcher is always responsible for winning and losing the game. Similarly, the role of the President in the American political system can be overestimated due to the attribution of economic conditions and other complex issues to the President's actions. This flawed thinking can lead to incorrect assumptions and decisions. Additionally, the division of power in the American political system, as Don Rumsfeld pointed out, has been a key factor in its success. The example of the attribution error in relation to hitchhiking in the 1950s and 1960s shows how this flawed thinking can also impact safety and other areas of life.
Hitchhiking: A Market Equilibrium Disrupted by Fear: The fear of hitchhiking violence disrupted the market equilibrium between hitchhikers and drivers, potentially based on a few terrifying stories.
The perceived danger of hitchhiking led to its decline in popularity, as depicted in the discussion about a hitchhiker's unfortunate encounter with violent kidnappers. Economist Steve Levitt views hitchhiking as a market where riders and drivers meet, often without exchanging money. In the 50s, 60s, and possibly 70s, there was an equilibrium between hitchhikers and drivers. However, the assumption is that hitchhiking became too dangerous, causing the equilibrium to be disrupted. The discussion reveals a lack of substantial data on hitchhiking violence, leading to the question of whether the fear was justified. A single terrifying story, such as Colleen Stan's, could have been enough to change public perception and behavior.
The Danger of Hitchhiking: A True Story: While hitchhiking is risky due to potential encounters with harmful individuals, eliminating it doesn't reduce violent crimes. Individuals must assess risks and make informed decisions for personal safety.
Hitchhiking is a risky activity due to the potential danger of encountering harmful individuals. This was highlighted in the story of serial killer William Bonin, who kidnapped and murdered Colleen Stan in 1984. The fear of hitchhiking led to its decline as a common mode of transportation. However, it's important to note that the real danger isn't hitchhiking itself, but the presence of violent individuals in society. Eliminating hitchhiking doesn't necessarily reduce the number of violent crimes. The decision to stop hitchhiking was a social change driven by fear and a lack of trust, but it didn't actually address the root cause of violence. Despite the risks, some people still choose to hitchhike for economic reasons or as a means of travel. Ultimately, it's up to individuals to assess the risks and make informed decisions about their personal safety.
Hitchhiking: A Declining Form of Transportation: Once a common way to travel, hitchhiking is now less popular due to various factors including access to cars and other transportation options, but it still offers unique experiences for some travelers.
...hitchhiking is no longer a common mode of transportation for many, especially those who can afford their own vehicles or prefer other forms of travel. The reasons for this shift include the greater availability of driver's licenses and cars, the longevity of vehicles, and the convenience and affordability of other transportation options like buses and planes. However, for some individuals, hitchhiking remains an appealing choice for the experiences and perspectives it offers. Despite the decline in hitchhiking, it continues to serve as a unique and meaningful way for travelers to connect with others and explore the world.
Underutilized Cars and Hitchhiking as a Solution: The average car in the US commuting to and from work is underutilized, hitchhiking could potentially reduce costs, congestion, and carbon emissions by filling empty seats, and technologies and practices like ride-sharing platforms and slugging make it safer and more organized.
The average car in the US commuting to and from work is underutilized, with about 80% of its passenger capacity empty. This statistic highlights a significant inefficiency in our transportation system. Hitchhiking, an alternative way to fill empty seats, could potentially reduce costs, congestion, and carbon emissions. Technologies and vetting systems already exist to make hitchhiking safer and more organized, such as ride-sharing platforms and practices like slugging. Despite fears of strangers, statistics show that most crimes involve people who know each other. Hitchhiking was likely less dangerous than perceived, and abandoning it may have been unnecessary.
The Importance of Trust in Society: Trust is vital for societal function, and its absence can lead to wasted resources and a domino effect of other losses. Individuals can promote trust and reduce fear to create a better society.
The destruction of trust and the subsequent loss of social equilibrium, as exemplified by the decline of hitchhiking, has detrimental effects on society. Trust is essential for a functioning society, and its absence can lead to a domino effect of other losses. The economy's struggles mean that resources are tight, and the wasted capacity in cars driving to work is just one example of the potential benefits of trust. Unfortunately, the President's power to improve the economy is limited, leaving individuals with the opportunity to make a difference. By promoting trust and reducing fear, we can create a better society in countless ways. The Freakonomics Radio team encourages listeners to consider the power of trust and take small actions, like hitchhiking, to contribute to a more trustworthy world.
