The Answer Is Transaction Costs

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BIBLIOGRAPHICAL NOTE:  The information in this episode comes from Red Flags Press.  Their main web site is very useful for research purposes, and I recommend it!
We follow the idea of the “social parasite” through socialist writing and show how it shifts from moral accusation to an enforceable legal category once society claims ownership over individual labor. We argue that the transaction costs of monitoring effort and assigning “socially useful” work push real-world socialism toward surveillance, coercion, and punishment.
• socialist critique of wage labor as work or starve
• transaction costs as defining, monitoring, and enforcing property rights
• the property rights switch from self-ownership to society owning labor
• “from each according to their ability” as an obligation backed by force
• socialist writers labeling middlemen and many professions as parasites
• the party as the decision-maker when prices are suppressed
• Joseph Brodsky’s trial as a real anti-parasite enforcement example
• why the parasite problem expands and becomes politically arbitrary
• how similar labor-claim logic shows up in authoritarian socialism and fascism
• why Scandinavian social democracy is capitalism, not classical socialism
The book of the week is Lenin’s What Is to Be Done? Burning Questions of Our Moment, and I strongly recommend it.
Links:
Red Flags, "Why Socialism Says Slacking is Theft."
Moments in Soviet History: The Trial of Joseph Brodsky
Leo Huberman, The ABCs of Socialism.
"Soviet Era 'Parasites'" https://www.themoscowtimes.com/2016/05/20/soviet-era-parasites-return-to-todays-russian-a52934

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 break down how sportsbooks function as brokers that match contracts, set prices through the point spread, and earn their living through the vig. Kevin Braig joins us to explain how law, technology, and property rights shape whether sports betting markets stay clean or slide toward corruption and bad incentives.
• five reasons people gamble, from dopamine to positive skewness
• what a sports bet is as a contract and why a book exists as a broker
• how the 11-to-10 price and the vig work in practice
• why point spreads are a pricing technology and a marketing tool
• how street-level enforcement and local political capture governed bookmaking
• why Nevada legalized betting and how phones and smartphones changed everything
• the Coasean case for clearly assigned property rights between leagues and books
• how prop bets and inside information can erode trust in games
• why extreme taxes and licensing fees raise transaction costs and distort markets

Judge Kevin Braig's book, "Bookmakers vs. Ballowners"
RH Coase, "The Problem of Social Cost"
Gustavo Dudamel's opera, "Wealth of Nations"

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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Hereditary monarchy seems like a ridiculous way to pick a leader, yet it dominates most of human political history. We argue the reason is transaction costs: succession systems survive when they settle “who rules next” cheaply enough to prevent recurring civil war. 
• Why hereditary monarchy is historically prevalent compared with democracy and universal suffrage 
• Why “divine right” stories often rationalize a choice people already find tolerable 
• Thomas Paine’s critique of hereditary succession and what it misses 
• Hobbes on the state of nature as what happens when sovereignty is contested 
• Succession as the master coordination problem of political order 
• Transaction costs applied to elections, enforcement, legitimacy, and rent seeking 
• Why elective monarchy can become an armed auction for total power 
• Bright line rules versus discretionary selection and why speed can beat “better” 
• How constitutional design lowers the cost of leadership transition when it works 
• The legitimacy problem and why dynasties converge on endogamy 
• The genetic consequences of endogamy and the Habsburg cautionary tale 
• Twedges, book recommendation, and a listener letter on board game “math trades” 

LINKS:
Thomas Paine, Common Sense, February 1776
Michael Munger, The Ugly Pig, 20224
A.P. Martinich, Thomas Hobbes:  A Biography, 1999.
Thomas Hobbes, Leviathan, 1651.
Neal Schultz, Suicide Kings: Hereditary Monarchy, 2025
Tbadel Barter App
Cosmos Institute, Coasian Bargaining at Scale, 2025

UPDATE: An interesting, and more clearly articulated, application of the reasoning here.... https://aminga.substack.com/p/how-transaction-cost-economics-explains

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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Permits feel like “just paperwork”, until they quietly become the biggest barrier to building, investing, and even basic economic growth. We use Chile’s fight with “permisologia” to show how bureaucracy creates delay, uncertainty, and political risk even when the stated goal is safety or environmental protection. 
• permits as transaction costs that quietly tax projects and entrepreneurship 
• why bureaucracy is not the same thing as government and why it crowds out market coordination 
• “permisologia” in Chile and how a one-stop shop becomes many counters 
• parallels to India’s license raj and the logic of rent seeking choke points 
• Dominga as a case study in shifting rules, scandal, and investment held hostage 
• documented GDP and jobs costs from permitting delay and collapsed processing capacity 
• Chile’s LMAS reform plan including deadlines, digitization, and sworn declarations with sanctions 
• Parkinson’s Law, bike shedding, and why committees obsess over trivial items 
• listener letter on commune life and how transaction costs show up inside “one big firm” 

Links:
What is  "Permisología"? https://comentarista.emol.com/2294117/27242033/Emol-Social-Facts.html
Framework Law (LMAS):  https://www.bluefieldresearch.com/research/chile-takes-another-step-towards-mining-reform/
Parkinson's Law and the "Law of Triviality":  https://fs.blog/parkinsons-law/
Twin Oaks Community:  https://www.twinoaks.org/
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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A talk with Dr Anya Shortland about the economics of ransomware and the gray-zone institutions that let extortion markets function when nobody can truly enforce trust. We dig into how cyber insurance quietly becomes a form of governance, why data leaks change the game, and what national security risks emerge as everything gets connected. 
• criminal markets that sit between legal firms and underworld gangs 
• insurance as governance through protocols, repeat play, and incident response packages 
• why victims amplify risk when they throw money at crises 
• the origin story of early ransomware and the transaction costs that made it fail 
• step-by-step ransomware mechanics from phishing to exfiltration to encryption 
• how gangs price ransoms by reading cash flow and insurance certificates 
• leak sites, privacy regulation, and third-party liability as bargaining leverage 
• why cyber insurance is fragmented and slow to enforce security standards 
• deductibles, coverage caps, and market hardening that push better cybersecurity 
• AI-enabled phishing and the asymmetric arms race between attackers and defenders 
• state-linked ransomware, impunity jurisdictions, and critical infrastructure threats 
• efficiency versus resilience in smart cities and the Internet of Things 

Anja Shortland at Kings College London
Shortland's book, Dark Screens:  https://www.amazon.com/Dark-Screens-Hackers-Shadowy-Ransomware/dp/1541705750
Shortland's first TAITC episode: "Deals with shadows"

Links mentioned in podcast:
Alex Danco's pirate puzzle
Pete Leeson's book, The Invisible Hook
David Deutsch's book, The Beginning of Infinity

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