The Answer Is Transaction Costs

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We trace how Hebrew goes from a “museum language” to a living vernacular by treating language as a coordination good with huge network effects and real transaction costs. We follow Eliezer Ben-Yehuda’s strategy for lowering those costs, then watch the Technion language fight prove Hebrew can carry science, not just prayer. 
• Hebrew’s revival as a rare case of full language reboot at scale 
• Jewish linguistic diversity and why German, French, Russian, Polish, and Yiddish create coordination barriers 
• Spoken language as a network effect and why “no one wants to go first” 
• Inframarginality and Ben-Yehuda providing a public good as a private mission 
• Hebrew as a neutral focal point that no faction fully “owns” 
• Building missing vocabulary through roots, grammar, and standardization bodies 
• Bootstrapping with a native-speaking child as proof of concept 
• Newspapers as distribution channels that reduce divergence in word choice 
• Backlash from religious authorities and the real enforcement costs of change 
• The 1913 Technikum decision and the Technion language war over German vs Hebrew 
• A listener extension connecting Rawls, insurance, and the veil of ignorance 
• Book recommendation on American founding ideals and proclaiming liberty

If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

You can follow Mike Munger on Twitter at @mungowitz

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We tell the story of the Chicago dinner where Ronald Coase walks into a hostile room, and by the end everyone votes with him, led by Milton Friedman changing his mind in real time. Along the way, we unpack why transaction costs, not moral blame, often explain when law and institutions shape outcomes. 

• the Aaron Director dinner and the vote that flips 
• why Milton Friedman becomes a political symbol and lightning rod 
• critiques from the right and left on markets, shareholder value, trade, and Chile 
• Pigouvian externalities versus Coase’s reciprocal harm framing 
• the Coase theorem as a benchmark and why real transaction costs make institutions decisive 
• the “twedge” on comparative advantage and the “no free lunch” remix 
• listener question on tax horizons, regime uncertainty, and the permanent income hypothesis 
 
LINKS:
Who's afraid of Milton Friedman (a video)
Milton Friedman Lives (a blog post)
Steve Medema, "What Happened on Blackstone Ave?"
Mary Roach, BONK
If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

You can follow Mike Munger on Twitter at @mungowitz

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We walk through the weirdly powerful math that makes a stable $10,000 profit stream worth $50,000 in one world and $1,000,000 in another. Then we apply the same present value logic to politics and show how unpredictable rules raise transaction costs, inflate the effective discount rate, and freeze long-term investment.
• the discount rate as the hidden driver of valuation
• why the consol bond makes present value intuitive
• P = X / R as a shortcut for long-lived assets
• how low interest rates mechanically boost asset prices
• discount rates as opportunity cost plus inflation plus risk
• regime uncertainty as political risk priced into investment
• how New Deal “experimentation” can prolong a downturn
• modern examples through tariffs tax policy and regulation
• a listener puzzle on why Coke concentrate costs more
Tell me what the answer is.
If anybody knows of a recording of the George M. Cohan play, Broadway musical, I would certainly like to be able to find it.

Michael Munger, "How Interest Rates Set Asset Prices: One Weird Trick," The Daily Economy, May 28, 2025 
Robert Higgs, "Regime Uncertainty: Why the Great Depression Lasted So Long and Why Prosperity Resumed after the War," The Independent Review, Spring 1997 
Amity Shlaes, The Forgotten Man: A New History of the Great Depression (HarperCollins, 2007)
Franklin D. Roosevelt, Oglethorpe University commencement address, May 22, 1932 
Book o-da-week:  Robert Higgs, Depresssion, War, and Cold War, (reprint) Independent Institute. 
If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

You can follow Mike Munger on Twitter at @mungowitz

Send us Fan Mail
We argue that “friction” is not always a flaw and can be a deliberate shield against bad collective decisions. We use Buchanan and Tullock’s public choice framework to show why supermajorities, veto points, and other transaction costs can protect rights while still leaving room for day to day governing. 
• contrasting cheap outrage with intentional institutional friction 
• explaining why constitutional amendment rules use supermajorities 
• breaking down external costs versus decision-making costs 
• applying the framework to routine policy versus foundational rules 
• linking cancel culture to collapsed coordination costs and lost buffers 
• spotting designed friction in bicameralism, vetoes, jury unanimity, central bank independence, corporate charters, and treaties 
• testing objections about minority rule, the filibuster, and who classifies “big” decisions 
• discussing ballot initiatives, referenda, and easy-to-amend constitutions 
• sharing listener letters, egg market notes, and a book recommendation 

Links:
Shruti Rajagopalan on TAITC
The Senate is the Enemy... (claims it comes from "The West Wing," but this is a story that I heard in the 1980s. West Wing just used it. Strange that people think a TV show is a SOURCE. It was just the MEDIUM, people!)
Book-o-da-week:  Benjamin Labatut, THE MANIAC
If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

You can follow Mike Munger on Twitter at @mungowitz

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We test a simple bakery price-fixing pact and watch it unravel, then use that failure to explain how transaction costs shape institutions, from unenforceable contracts to the rise of the corporate trust. We connect the common law doctrine of restraint of trade to the Sherman Act, modern merger fights, and a real-world egg pricing controversy where evidence is hard to untangle from supply shocks.
• a two-baker cartel that collapses as soon as cheating pays
• why courts historically refuse to enforce restraint of trade agreements
• how the trust device unifies control and removes the need to “trust” rivals
• how the Sherman Antitrust Act targets trusts and criminalizes collusion
• why merger discretion creates power and invites rent seeking
• why high prices and parallel pricing are not proof of conspiracy
• how price indexes can reduce transaction costs and also enable coordination
• two antitrust “twedges” that poke at efficiency arguments
• a listener letter on lateness norms and why uncertainty matters
If any listeners have some ideas about it, please do write in.

Links:
Egg producers settle
Bartholomae, T.C. (1923). “The Common Law on Restraint of Trade.” University Journal of Business, 1(4), 451–466.
 Munger, M.C. (2021). “Giants among us: do we need a new antitrust paradigm?” Constitutional Political Economy. https://doi.org/10.1007/s10602-021-09350-w
Sherman Antitrust Act (1890)
William Baxter Joke 
Robert Bork, Antitrust Paradox
If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com !

You can follow Mike Munger on Twitter at @mungowitz