KXEL Presents: The Jacobsen Group Podcast – January 3, 2026

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Good morning on the Jacobson Group here on KXEL, 1540, 100.5 FM.

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Economics is the study of human choice in the world we live.

Faith is confidence in what we hope for and assurance about what we do not see.

By investigating faith in economics, we can learn how they lead to human flourishing.

This is the Faith in Economics podcast, a presentation of the Gortney Institute at Ottawa University.

Welcome to our show today.

My name is Peter Jacobson.

I'm the Gortney Professor of Economic Education and Research here.

Joining us, we have Dr. Justin Clark, the Menard Family Professor of Philosophy and Ethics.

And also, in showing our show, we have Dr. Russ McCullough, the founder of the Gortney Institute and the Wayne Angel Chair of Economics here at Ottawa University.

All right, well how many of you listeners were held up at the airport with the latest government shutdown?

There's a lot of grief and anguish and money lost in a variety of ways during the government shutdown.

So it's just, to me, it was just a classic case of government failure on how big of an impact that could ultimately have for all the reasons it did.

It really all points to them not being able to

pass something through legislation and the bad news is we've got another one coming up I believe it's end of January sometimes so so I felt compelled to send a letter an op-ed piece to the Wall Street Journal I don't know if it's going to be published or not I guess we'll find out by this but I'll try to get it out to some other outlets and I thought it'd be fun to talk about it today

Being an economist, I'm always thinking, oh gosh, there's losses on both sides.

Nobody's happy between consumers, people who are the air travelers and then the people working for the air traffic control and the TSA, and then of course the airlines themselves that had to change things around.

So wouldn't there be a way to make things better?

Wouldn't there be some way to have people come together on this?

So here's the idea that popped in my head.

Why wouldn't the airline

be able to create a fund together that would loan money short term, very short term to the workers who were...

Required to show up to work, but weren't going to get paid until the government opened up again So we have this people there was different categories of people so I'm specifically talking about like the air traffic controllers and TSA agents where they were for sure going to get paid They just have a deferment and you hear about oh when this was being talked about on the media that people do go to their banks and you know get short-term loans But not everybody's in the same position to have that

Lending facility there or put it on a credit card or whatever, you know go to other sources So why not have a unified place where people could go for?

Loan and so the millions of dollars that were lost by the airline industries I thought well shoot they could probably give them an interest-free loan and still be ahead well to my surprise it was even more ahead than I thought and I thought it was gonna be after starting to do the the work I learned Delta Airlines reported losing 200 million dollars

And so I started thinking, well, jeez, if that was $200 million, I wonder how much it would actually be to cover paychecks.

I went and looked at how many people were out of employment, and so I found an article.

This is all just simple Google searches, to be honest.

I didn't go through and vet them super carefully, which I'll just leave it to the people if they want to advance this further to do.

But there were 60,000 people.

Average paycheck from the government, which again might be, I'm thinking a little high, but $4,700 every two weeks, was the just blanket average of government employees, which like I said, that might be higher than the 60,000.

people were talking about.

So if the Delta and other major airlines and other airlines were able to pony up some dough to use for payday loans essentially, where they would be paid back as soon as the government opened up, this was the longest shutdown in history, 43 days.

So we have, if they would pony up three pay periods worth of money, that ends up being about 15,000 per

Employee 15,000 times 60,000 gets us to this 114.

I'm sorry.

Yes 114 million is 820 million total for the to cover all of the paychecks I'll come back to the 114 and sorry.

I probably should have my article open So that would be an 820 million dollars to cover three weeks worth of paychecks for all these 60,000 people So then you know, how would it be allocated?

I thought you need to come up with some sort of simple rule to

know how much each airline should pony up for this.

And so what I did is I looked at the average number of flights in a month and so

They're currently the the FAA reported 43,000 per day.

And so I extrapolated that out to to a month.

And I think we were in the the million over a million flights in a given month.

And Delta is 180,000 of those flights on average.

And so are most the other major airlines were very similar to that American Airlines Southwest.

So 180,000 Delta flights means that they represent 13 and a half percent of the total flights going

in an average month.

And so they would pony up 13.5% of the 820 million, which is the 114 million I accidentally blurted out earlier.

So already them putting 114 up is less than the 200 million that they lost.

So keep that in mind.

So now there's a opportunity cost of their money.

So I just again somewhat arbitrarily said 6%.

And so lost interest would end up being about $800,000.

If you take six weeks worth of lost interest at 6% on Delta's 114 million, we're talking $800,000.

And so if everything went smoothly where

They made a payday loan.

The people paid it back when the paycheck came in because they're going to get exactly the paycheck is their amount of the loan and then that exact amount comes in their paycheck once the government opens up.

Then that loan is immediately paid back and all of the airlines are made whole.

From the funds that were in the account they get their 13 and a half percent back of whatever funds remain in the account And so that is if it ended up being eight hundred thousand dollars of opportunity costs.

It's losing eight hundred thousand versus the reported losses of two hundred million kind of a no-brainer and plenty of room for wiggling on Russ's back of the envelope numbers conceptually

I think this could work, and I don't even think all airlines would have to necessarily participate to make it work.

There's many ways that this, I think, come together.

Again, if people defaulted on the loan, didn't pay back their loan right away, the normal recourse would be there for collections and other things.

But I think this really has some potential.

to make everyone's life a lot easier.

So you add up Delta saving 200 million and the other airlines being maybe somewhere around there, you're probably approaching a billion dollars pretty quickly.

And so I called this the billion dollar idea, billion dollar idea.

because then you quickly get over a billion when you add in the air travelers cost of extra restaurant meals, delays, canceled trips, canceled business deals, all of the pain and anguish.

If you put the non-monetary suffering and estimate it, I think we're easily over a billion.

So let me pause there.

That's conceptually, you know, what, what I was thinking.

And I love the idea in that it doesn't require government bureaucrats or politicians to sanction it or to

Blessed at least I don't think so maybe there is some legal thing since their paychecks are coming from the government that there'd have to be something so that would have to be explored But it's basically a private solution to this problem.

Yeah, I think your last point there is where I want to hit so first off I do believe that it's possible that there are solutions like russes on the table and that this actually might be one of them I think the first step is thinking why might not this already happen now for the record some economists would say

in the extreme that this won't work, and the reason it won't work is because it hasn't been done already, right?

And people did that to Julian Simon when he proposed the reverse auction system for Airlines.

So I don't think that that's a good route to go as an absolute, but I do think that there's value in asking the question, well, why hasn't this been done?

And so to answer that question,

You either need to, you can need to locate one of two things.

You need to locate either like a switching or information costs.

That makes this very difficult for someone to come up with or to implement or something like that.

So that's possible.

And if that's true, then like, if it's an information cost, then Russ's article actually fixes that.

And so you like, maybe it becomes viable now.

But then another question is, is there somebody who actually benefits from this?

In other words, is there a vested interest in the way that the government shutdown does this?

or results in this.

And so a really easy and I think wrong story.

Oh, Justin, you got something.

Are you saying is there someone who benefits from shutdowns when they occur or is there somebody that would benefit from Russ's proposal?

No, I'm saying is there somebody who would benefit from a shutdown impacting air traffic control?

Right.

Okay.

In other words, is it is it good for someone that the air traffic controllers cannot fulfill their job or aren't paid or whatever?

Because if it is, then maybe that's why a Russ's solution does seem like it seems like a Pareto improvement, which is Russ's really good point is that like it's a win-win-win.

Everybody wins.

The airline loses less money, so they win.

Their traffic controllers continue to get paid.

They win.

The government doesn't have to be responsible for flights getting delayed, so they win.

It is a no-loser situation.

That's kind of the interesting part about the proposal.

In economics, it's rare to have no-loser proposals in a functioning economy, but it does happen, and I agree with what it does happen.

But it usually happens because of government.

Yes, yeah.

It caused it.

So then the question is, well, actually, is there somebody who would lose from this solution?

In other words, another way of saying that is, is there somebody who gains from the air traffic controllers being out of work?

I can think of one group, maybe, that that's the case of.

So the first question is, does the executive branch lose by Russ's proposal here?

And here's maybe why they would.

And I'm not saying for sure.

And I think they could argue other groups too.

But in my frame, the way I approach the government shutdown thing is, government shutdowns are a cost imposed mostly on the executive branch, I think.

Because the legislative branch, I don't know if they directly benefit, but like they don't seem too concerned about getting through it, like they actually get vacation time, like it doesn't seem to, like it's a situation where no individual person loses credibility because Congress is already so unfavorable anyways that like it doesn't seem to really affect their electability.

And

everybody goes through it at once, so it's not like one cop.

So I think the legislature doesn't seem to care, but the president does lose time, especially when you have the situation.

we have right now, where Trump is the president of a party who has the majority in the legislature.

And so he's literally his days take away during shutdowns, his days to get things done and through the legislature.

And so it could be the case that the executive would want the FAA to have the air traffic controllers subject to the government shutdown.

So that way, when there's a shutdown, there is public pressure to end the shutdown.

That's possible.

And by the way, I'm not saying the president is smart enough to figure that out.

What I'm saying is an institution controlled by the president would evolve in that direction.

They would evolve in a way that there would be some sort of backstop to prevent shutdowns from carrying on forever.

And as far as I know, the FAA is under the president's discretion pretty significantly.

So that's a possibility.

I don't know.

I don't think that that debunks for us, because like I said,

before.

I don't think that we live in a world with zero $20 bills on the sidewalk.

I think there has to be profit opportunities out there.

But that's my best stab at like, who could be benefiting?

And by the way, even if that is true, that doesn't mean Russ's solution isn't good.

It still actually would be good for the public if this was adopted.

It's just would be an explanation for like, what is standing in the way?

Like, why haven't we done this yet?

It might be because the president doesn't want this to happen.

And I do agree with Russ that at the end of the day,

I bet there is some sort of like legal issue like that because these are government employees.

Even though you would think that the government would love to accept this free essentially free money from the airlines.

pay their workers with this interest-free loan, essentially.

If it was interest-free, they would look really bad

from a public standpoint.

Unfortunately, you got some stupid law standing

in the way.

Unfortunately, the government does that all the time, right?

Like, the government all the time will be like, oh, like, if I imagine, you know, just for a second that, like, I need to do something at 505 in my local municipal office.

And I say, hey, if you all stay an extra, you know, 10 minutes, I will pay you each $1,000.

The people would probably take that deal.

I would take that deal.

It would benefit the government on net because then in theory, like I'm compensating for like a significant amount of their wages, but we all know that the government would not allow that to happen, right?

Like that would go to some manager in some office who would say, we're legally not allowed to stay open 10 minutes for $1,000.

And maybe there's good reasons for that.

You could make arguments about white bread.

But the whole point being, I think Russ, your instinct is right that there's probably some legal challenge, but that could be overcome, right?

That's endogenous to your article.

Like you could maybe make a law that would fix that.

And then I think if

there is something like that, some sort of challenge.

I think the reason it exists is because the executive branch kind of evolves to this level of stopping the government shutdowns.

Well, this looks like a good spot for a break.

And Justin's got something to say.

I've got some something to say.

And I kind of lost a little bit of your argument that I'd like you to clean up with the benefits or harm to the president.

So there was something that was just a little came away a little bit unclear on.

So we'll pick up from there in just a bit.

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OK, so we're back.

Gator, you're bringing up some good points there on who benefits or who gets hurt from the shutdown outside of the airline that might perpetuate and not come to solutions.

Justin, what were you

thinking?

I was thinking about Peter's point and I'm wondering if this is, I think it's the same point and you can tell me if I have your point right, which is that if in government shutdowns, it's the executive branch that tends to pay the biggest political price.

They're usually the ones who are being blamed by the press and the...

the legislative branch, even if the legislative branch was the one blamed, there's just too many people upon which that blame could lie to where the executive branch, it's like, heavy lies the crown.

And so while Russ's proposal

take some of the sting out a government shutdown.

From the executive branch's perspective, no, we want that pain spread around because we want other people to feel this pain too.

Otherwise, there's less of an incentive for these government shutdowns to end.

And so on the margin, if we have a pain-free way to keep people getting paid during government shutdowns, that would actually lead

On the margin to more government shutdowns because the amount of pain suffered by Joe Sixpack goes way down.

Yeah, yeah, and I perfect characterization and I agree with characterization.

Now that doesn't actually mean that that's what's happening here.

But it means that that would be a reason why the executive branch wouldn't like this, right?

They do want people to be in pain during the shutdown because if the pain is lower, the length of shutdown on the margin increases.

Exactly as you put it.

Great,

great point.

I think that would be great, actually.

I think there would be some benefit of longer shutdowns showing that, hey, what do we need these guys for anyway?

We should really limit government a lot more because we're actually playing doing pretty good.

So short of these airline type situations, if we had private that, because this is what I believe would happen with shutdowns, I think I maybe mentioned this on another podcast.

I talked to it about with my students about it, is that you'd be surprised what's going to emerge spontaneously or merge

solutions when the government leaves the void, right?

So so much of our stuff is crowded out, whether it's private charities being crowded out.

I think that was another example where I really didn't believe for a second that people were gonna starve very much.

They might go a little bit hungry with the SNAP program drying up.

I know Americans will step up non-profits and otherwise, and they did.

Here locally, our churches, we all bumped up food donations

And so I think it would be awesome to see the government actually, if they were out for longer, all the ways that we would find private solutions and this airline thing being just one of them.

private solutions where the government currently is just in the way and they're there and it's always been done that way and blah blah blah.

I think we'd see a lot of solutions emerge and so I find that kind of exciting.

That's a little bit off topic of where we're going because I did want to add the Democrats, I think, you know, called a few of their constituents turncoats when they said, nope, the pain is too high.

This is, I don't want to be a part of this.

And so that's what allowed the government to open up when, I can't remember, was there four Democrats or so that changed their vote to allow it to open through majority.

You know, Justin, you look like you're

thinking.

Yeah, I didn't like Federman take a lot of heat for taking this line.

Yeah,

and so but and the point is is that they that pain of the shutdown caused them to flip and so then we're back back to what we're talking about that if the pain was taken away then the shutdown would last longer.

What I'm stepping in and saying is I'm saying go for it.

Let's have longer shutdowns.

If we find private solutions like this to fill the void, we might actually get a limited government someday.

This might be a mechanism to get a more limited government in our lives.

And I know not everybody feels that way.

Maybe I think the two

on this podcast, Mike, but I think that would be an interesting mechanism.

It sounds kind of like there was a proposal put forward by Curtis Jarvan from 15 years ago, which is titled Rage, Retire All Government Employees.

And his proposal was something like, you can't fire the government employees, but you have to buy them off.

It would be better to just keep paying them and prevent them from doing the job that they're getting paid for.

just give them a pension rather than trying to get rid of them.

And that kind of sounds like this proposal that you're talking about, which is, look, even if we still have the government there, as long as we allow private people to come to their own solutions, we're better off with a government being shut down than one that's actually operating.

Well, one thing I didn't even think about, I assume there's special taxes or fees that the airlines all pay to have those air traffic controllers in place.

I don't know what that is, or if it's a little murky, but I can't imagine there's not some sort of special fee structure, similar to what they have to pay for airports, utilizing airports.

Maybe it's just built into the

Pricing I kind of doubt it.

It must be a special because you have a mix of private companies The airports and federal a lot of them are either state run or federally run

This this doesn't bring me to the other question Which is by the way that this is not an objection to Russ's proposal because I think Russ's proposal is actually more realistic than what I'm about to say But why do we have FAA traffic controllers at all?

Why don't airports hire their own traffic controllers and like

Can the airport have an incentive to not let planes run into each other?

Obviously, right?

Nobody's going to fly into Ronald Reagan National Airport if every other week there's a mid-air collision.

Because someone didn't show up to their shift as air traffic controller.

This is so obviously a job that can be handled by the private market.

If we can have private neurosurgeons, which we do, then of course we can have private air traffic controllers.

It's not nearly as skilled of a job, no offense.

I mean, neurosurgeons are a very difficult job.

That's why I'm comparing it to it.

And it's also like probably lower in terms of like the urgency, right?

Like it's important to get air traffic controller right.

But I imagine there's actually a significant margin for error.

Neurosurgeon, in a literal sense, there's very little margin for error in terms of actual distance.

So I think at the end of the day, we have some sort of weird...

I'm sure this has just arisen out of like some sort of crazy regulatory framework that sort of came about and has just evolved into some sort of bureaucratic monstrosity that we could never actually remove.

But I don't get it.

Actually, I always forget when these shutdowns happen, they're like, oh, air traffic controllers are going to lose their jobs.

My first thought is always why?

Why would this affect air traffic at doors?

And then I remember, oh, yeah.

For some reason, our governments decided that that's something that like

airports couldn't do, even though they obviously could do it.

Yeah, I got

it.

Go ahead, Justin.

If we do that same analysis that you gave, Peter, then you go, well, why would the government want to keep their monopoly on this thing where they know they can actually disrupt everybody

in the country?

Yep, you're

right.

They can triple travel if their little wish list doesn't get fulfilled.

Yeah.

Or even in other circumstances, right?

Yeah.

It's a very, like, oh, like during COVID, right?

I don't think they've leveraged this lever during COVID, but it'd be very easy for the government to say, hey,

All air traffic controllers now have the option to take 12 months on paid or paid vacation, right?

And then nobody shows up and they don't even have to like, they don't have to ban flying.

They can just make all the employees go home.

And then as a natural reserve, there's no more flying.

You know, I'm not a huge like conspiracy.

Like the government is secretly trying to prep us for no planes.

I don't think that's happening actively, but it could be that's a lever that exists that could be pulled anytime.

And I think a government, you know,

A representative in the government has no incentive to remove that lever.

You made me remember that the FAA was really under scrutiny or air traffic control or just in general with the airplane crashes that we had.

Remember the stuff in New York and so they've been under scrutiny within the last year even.

So I think there was private or pushes that way.

They're antiquated electronics and equipment.

You know, Trump kind of ran on getting that stuff updated so that we're up to speed.

But I think you're calling a better question of, well, maybe it should just be privatized and those issues would probably resolve themselves.

Also, I think this is a classic example of how historically we may have needed the federal government more than we need today.

So there might have been coordination issues that would have been difficult for private airplanes, private airports to do with the

So the government, you know, I'm not usually one to praise the government, but the government acting as a coordinator of a massive international, you know, because it's international too, a program of bringing flights in was maybe needed back then, but not needed now.

I think of a US post office in this kind of the same boat.

They might have helped coordinate that early on, but now FedEx, UPS, email, blah, blah, blah has really made the US post office.

not needed as a as a federal program in my opinion.

But again, this just comes down to it's another department.

So there's people that have their job at stake and job security, and we've always done it that way.

I think the general public is in general complacent to that.

They're like, oh, I'm comfortable with it.

I'm used to it.

It's not a, you know, even if it loses money, it's not that big of a deal.

So I think so many things at the federal level fall into that category.

And I think Doge stepping in with

trying to address government waste in various ways was a step in the right direction, but more towards privatization might be the answer in many cases as well.

I think the education department is one of those, right?

Where we have private schools and voucher programs and charters that are now competing.

And so it calls into question, why do we have the Department of Education?

And it is being ramped down very quickly with power going back to the states and the education.

So I think there's a lot of things in those areas.

Yeah, I think you're spot on in the analysis that you could make an argument that when the internet, and I actually don't know technologically how the government managed the FAA, so I don't know that this is the real story, but when the government was the only entity that had the internet, which was true for some time, of course it would make sense to want to coordinate things with the internet rather than private companies that didn't have the same access.

Again, I doubt that's exactly how it worked, but your general point is still true that perhaps when technology coordination via technology was more expensive, technology via government made more sense.

And those margins have changed, but now for reasons that Justin brought up, the institutions are not following the cost decrease.

I think as usual, this argument may not hold water, but that's what's fun about this podcast.

We get to talk about whatever we want to.

Is there a national security argument possibly for the FAA continuing to basically run all air traffic control that in a war type setting, they would be more easily quickly to respond with

air strikes or air traffic.

I don't know.

I'm grasping at straws, but I don't know why I'm trying to now defend the government when I was just trying to tear it down.

Yeah, I don't think so.

I think if you're in a life-or-death scenario, you can move your plane a few feet to one side and our planes with military technology are probably advanced.

I agree.

And I think we already have special runways and stuff in certain airports.

The government could easily ground planes without having control over

like they could just call up the air.

Keep your planes grounded because we're about to launch.

We're using all and if you put one in the air, you're going to get smashed.

And maybe we have to tap.

We're tapping into your software to control whatever, you know, if there's something that maybe there'd be backdoors to tap in and utilize their equipment as needed in an emergency situation.

But

yeah, if anything, actually, my expectation would be the reverse that it would be you'd be more likely to have issues moving quickly with governments.

Probably your traffic controllers than private air traffic controllers.

So

yeah.

All right, well, any other last words?

Otherwise, this looks like a decent spot to rap.

Yeah, let's call it.

All right.

Well, this has been a production of the Gorton Institute here at Ottawa University.

I'd like to thank you all for listening.

Five Star Rating helps other people find us.

Otherwise, just pass this along to friends and family that might like to take a listen.

Other than that, be fruitful, multiply.

Thanks.

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Oh, Cracklin' Rosie there in the background.

Boy, so much Neil Diamond in the news now with movies and plays and some public appearances by Neil Diamond.

Well, that's how I first was introduced to the Hames family through an instrumental of Cracklin' Rosie by Neil Diamond on what's now KGAN.

It was then called WMT television out of Broadcast Park and Sea Drap is by Collins now Rockwell.

And it was, of course,

emanating from, as they said, broadcast park.

And it was then a CBS affiliate.

Now it's Fox, but Barbara, nothing has changed in terms of the quality and the conscience and the caliber of the multi-generational family that runs Hames Homes.

Tell us just a bit about yourself again in this great manufactured Homes empire that you guys have built, that you guys are respected national leaders in this industry.

Well, hello, John.

It's always good to talk to you and how about that awk I went?

Barbara Hames Bryant, it made my new year.

It was only, you know, it was New Year's Eve and it still made my new year go ahead.

I watched it in my office at the Hames Homes office.

Oh, it was great.

I was trying to pretend like I wasn't watching it so that my employees would be motivated to work.

See, I was working too.

I

was even following some of the written play-by-play on ESPN.

I didn't have actually the TV on.

I was following the written play-by-play on my lunch break.

I saw a bit on TV, but yeah, but we'll do it work to follow our Hawkeyes.

Yeah, I'm afraid I got busted by my Hames Holmes employees.

They're like, why don't you just quit pretending like you're not watching?

Well, I think when they heard me scream,

yeah.

They heard me screaming from the conference room.

I think they knew something was up.

But back to your original question.

My parents, Kurt and Norma Haynes, founded Haynes, the homeless people in 1969.

They retired from the military from the army and wanted to go into business for themselves.

They decided people are always really going to need good affordable housing.

So they decided to get into the housing business.

It's now a three-generation family business, and we like to think that every generation brings something new and better to the table to always help our customers, our residents, and our home buyers have the best possible experience.

Amen, sister.

I agree.

And of course, we have the great, well-named

Curtis Haymes on last week, but some other big family members.

It was Kurt Norma, now you and your siblings, and then as you say this, their generation firmly ensconced.

That's right.

It sure is nice to have Curtis Haymes the fourth here.

That's Kurt Haymes' grandson.

Right.

Troy's son-in-law, Clint Alderman.

Right.

And my son, Sean Bryant, who works in the property management department.

Exactly.

And Barbara, one thing we were just talking about here, this concept of New Year's resolutions.

And I think that I'm going to plug your website.

You guys have such a great website for your manufactured homes.

It's hamshomes.com.

But you can read about Summit View and Grand View.

You can read the great testimonials.

You can learn about financing.

You can learn about the listings that they have.

It's just wonderful, but they've also got a weekly blog along with those great archived commercials.

But Barbara, Hames Homes is here to help with New Year's resolutions, aren't you guys?

That's right.

If your New Year's resolution is to pay less for housing and get more for your money, Hames Homes is who you need to talk to.

As you said, our website is HamesHomes.com.

H-A-M-E-S-H-O-M-E-S.com.

Edward at the corner of Wilson Avenue and West Post Road, Southwest.

Wilson Avenue, West Post Road, Southwest.

We're open seven days a week for folks to come and look at our beautiful selection of homes.

Also, you can call us at 319-377-4863.

That number we've had since 1969.

319-377-4863.

Love for people to come and look at our communities.

Just drive around Grandview in Summit View.

You'll be impressed.

And I think it will help your quality of living beyond all of your expectations.

You know, if you want to exercise more this year, Haymes Homes has got it.

If you're at one of those two great communities, good grief.

They've got walking trails, open green spaces, playgrounds, Frisbee Golf, dog parks.

You've got ability to exercise there every day in their beautiful park-type settings.

So you want to get organized this year.

My goodness,

You've got build-in options for storage and organization.

Every site's designed with room for garage or a shed.

If you even need more room, there's open storage available at reasonable rates.

If you say, I need to get more sleep, well guys, at a Haymes home, there's no shared hallway spaces.

There's no shared walls.

You've got your own separate standing home residence on a lot with solid insulation and thoughtful

construction.

If you want to reduce stress in your life, what better than friendly vetted neighbors, a locally owned and managed family like the Hames's to work with when you've got a concern or an idea, clean neighborhoods, quiet, man, that's the stress reducer.

Barbara, I think you guys are built in for automatic fulfillment of healthy New Year's resolutions at Hames Homes.

Oh, we're happy to help you fulfill your New Year's resolutions.

Less stress, more sleep, more peace and quiet, less expense.

We're the ones you need to talk to.

Barbara Hamas Bryant, and guys, I'm going to tease a little idea here that I've talked to Curtis about, but we're hoping to do one or two live Saturday morning remotes

from Summit View and Grand View guys on Saturday or two coming up in spring or summer.

We'll have to coordinate schedules, but Barbara, I think it'd be great to do a live on-site remote during our Saturday morning program, right live on your site there at Hames Homes.

I love that idea.

Does it have to be on a Saturday?

No, it doesn't.

We've got all sorts of options and we even got bling.

We'll give away bling to get more people to show up, although just to see Barbara and Curtis, I'm sure they'll show even without incentivization.

Well, our place looks great on Mondays for our 55 and cruising club.

We've got seniors and adults from our communities to get together.

And I don't know what they do in there, but they sound like they're having a great time.

And then Friday mornings, we have breakfast here.

So if you'd like to do either Mondays or Fridays for a live remote, I'm on over.

You'll see how much fun we have.

I think Jeff Stein, the news manager there at KXEL, his ears will perk up and he's going to rub his hands together and say, this sounds great.

So Barbara, stay tuned.

That'll be a fun thing to do because people need to see it with their own eyes.

It's a marvelous encounter there.

Again, safe.

affordable, beautiful homes.

I can't think of a better vocation for a family than to make that their calling.

You guys have done that so well with such great ethics and competency.

Barbara Hames-Brians.

Thank you, John.

And guys, stay tuned next week.

We'll probably have another one of the great Hames' back with us.

Could be Barbara, could be Curtis, could be Clint, could be a mystery guest.

Join us next week at this time.

In the meantime, call that marine legacy number, get online to HamesHomes.com, or drive out there to view and grand

view.

Faith is confidence in what we hope for and assurance about what we do not see.

By investigating faith in economics, we can learn how they lead to human flourishing.

This is the Faith in Economics podcast, a presentation of the Gortney Institute at Ottawa University.

Welcome to our show today.

My name is Peter Jacobson.

I'm the Gortney Professor of Economic Education and Research.

Joining us today, we have Dr. Russ McCullough, the Wayne Angel Chair of Economics and the founder of the Gortney Institute.

And we're going to be talking today while Russ will lead us in action.

That's all right.

We're going to let you take the lead here fairly shortly anyway.

But I don't know if you all are familiar with these betting markets that have been there.

Really, Peter's the one who introduced me to them.

I don't think I was too up on them prior to him joining forces here at OU about five years ago.

And I guess it came up, I think, first of all, with the election cycle.

That would have been the Biden regime.

Yeah.

And Peter was like, well, the betting markets are have, you know,

so-and-so in the lead or whatever and sometimes it'd be for other races but it was specifically the presidential race and oh and it was also who was going to be the candidate at the time too or something so anyway there are places like polymarket and some and some others that take essentially bets and so they come up with a

you know, who's going to win the presidential election and then people actually put money on it.

And it works very similar to what a bookie does with sports betting, but you see where people are actually putting their money.

And that helps guide knowledge about the topic because it means a little bit more in economics anyway, when people are putting their money where their mouth is.

So these betting markets seem to be getting larger and more popular.

And so Peter thought it'd be a good time.

for us to hit today.

What else

do you got to say, Peter?

Yeah, so specifically what brought this up is CNN has announced that it's going to be partnering with Kalshee to integrate prediction markets or betting markets into their new cycle.

And I think I want to talk about to what extent this could be a good thing or a bad thing or both.

I think it's going to be mostly a good thing, but there are some possible downsides that I think we could address.

So let's talk about the upside.

CNN is not known for being an unbiased source.

Many listeners know that CNN is kind of a left-leaning news organization, at least by reputation, as most are except for Fox, which has the opposite reputation.

But CNN particularly agrees from 2016 to 2020.

in terms of like apparent bias.

And so this is a problem whenever you have people essentially making the news is you have an attempt to try to guide the news to be something that would be beneficial for the people on your side of the political aisle.

So you report political news in such a way that benefits your side of the political aisle.

And there's an obvious incentive to do that, both on the part of the owners of the company and so far as their interest in politics.

the, you know, top level management and so far as they can escape owner control or even just the anchor.

So the day-to-day basis.

And so for that reason, mainstream news is not really well regarded compared to like the Walter Cronkite era of news, right?

Journalist is what we used to call them instead of opinion makers.

Yeah, exactly.

Yeah, yeah.

The profession of journalist has gone really far down in the public opinion, I'd say over the last 20 years.

Probably a good way to explain this.

maybe even once a heroic profession by popular opinion is now considered like, you know, it's like next to tobacco executive, right?

And so adding prediction markets is valuable because one good thing about prediction markets is money doesn't care about your opinion very much.

And so if CNN decides that they want to

try to, I'm blanking on the exact word, try to depress the listeners.

There's a more technical term.

The Republican listeners are new, so that way, dishearten them.

Oh, dishearten.

Yeah.

Yeah, discourage.

Yeah, discourage.

Yeah, yeah.

Try to get the other side discouraged.

They could...

or maybe run biased, like, oversampled polls on the presidential election and then do a bunch of reporting on how, you know, the Republican candidate has historic low numbers.

And that can make a headline, but it can't make it true, right?

If it's oversampled, if the poll's oversampled, then the reality is that's not what the numbers are.

So the prediction market is valuable because anybody who has enough intelligence to figure this out...

can then bet against, essentially, CNN's claim there.

And when they bet against CNN's claim, that's reflected in the value of the prediction markets.

If CNN is saying that Donald Trump has a 40% chance of winning according to our polls, and the prediction market says Donald Trump has a 55% chance of winning, I'm going to bet on the money rather than the bias.

Because, again, it doesn't matter what your political opinion is, you should not be, and some people still do, but you shouldn't be betting according to who you want to win.

Betting is about who you think.

is going to win, right?

Yeah.

And so there's a tax on ideological people who are biased in prediction markets.

There's no such tax on journalists, at least not obviously.

In fact, there might be premium.

They might get a benefit for that in the industry, it kind of seems like.

Yeah.

And so insofar as CNN is incorporating prediction markets, I actually could see this as a benefit because I think it's going to squeeze some of the bias out of their organization because bias that ignores reality can't exist in markets.

Yeah.

Yeah, it's interesting.

I didn't even think about it until you just said it, that by using it, you're saying they're going to not say, according to a recent CNN poll, they'll actually use the Calci data.

Yes.

Yeah, that's the claim.

That does add a lot more...

They're going to

start integrating... ...massity and validity to their claims that they can say, I'm reporting

unbiased data in so much as the Kalshi platform is unbiased and untainted.

So that would be the next area where hopefully the owners of these places can prove through transparency and other means that it's not being corrupted.

Because to me as a naive computer guy, oh, this says 40%.

Let's just make it 45.

I think that would, you know, to me, it's just editing with my

word processor, but hopefully they have algorithms and security to not have that boat swayed.

But that's certainly an issue, isn't it?

Or do you know how these betting platforms

kind of protect their security that, you know, a George Soros or somebody else can't come in and put large wagers down to sway those percentages, because that's really moved the percentages, correct?

It's dollars bet.

I mean, I think it's possible that like a large donor could come in and try to sway the percentages, but when they do that, they lose money, right?

And so, what are your two options?

George Soros can call up CNN.

He probably doesn't have to offer them that much money to convince

them to do

something, or he could lose millions of dollars doing the same thing.

maybe to no effect, right?

Because if as far as he's manipulating that prediction market, he's still actually going to lose, he's going to change the probability to seem like his side's going to win.

Right.

But if he hasn't changed.

If

he uses more people to bet more against that.

Yeah, and if he hasn't changed the fundamentals, then he'll lose the money.

Yeah, there is kind of a self-correcting mechanism, the invisible hand there of if somebody is swaying at the direction that the general public doesn't think it's going, they have incentive to bet more against it and offset some of that.

Yeah, and to give a concrete example,

of this happening a long time ago.

And listen, we might have talked about this on the podcast before because it's one of my favorite topics, but kind of the original financial bets economics.

I mean, there have been lots of best throughout history, but in terms of like news and politics was the Julian Simon bet.

So Julian and Simon Paul are like two academics.

They have different views about what was going to happen to world resources.

Paul Ehrlich was convinced overpopulation was going to cause us to run out of resources.

Julian Simon was convinced that human creativity would kind of outrun population growth and allow us to have actually more access to resources.

So they put money on it.

Julian Simon said, okay, one of the most unreproducible objects we have on earth is metal, right?

Like we can't create metal.

You can't create iron.

It's just in the ground or copper or something like

this.

And so if we're really running out of these things, they should become more expensive to consumers over time, right?

That's what happens when you run out of something.

It's more difficult to acquire, aka more difficult to buy.

And so Ehrlich and Simon over 10 years had a bet about what would happen to the price of a bunch of different metals.

And Simon won.

And Simon's argument was like, I couldn't make the media believe me, like, you know,

Paul Ehrlich's going on, Johnny Carson, you know, he's on the front page of all these things.

The news won't even let one of my, you know, columns into the newspaper.

So what I'm gonna do is I'm gonna, instead of just talk, I'm gonna put my money where my mouth is, right?

If someone's not willing to bet against me.

talk is cheap, right?

And so I think integrating this into news has a lot of potential benefits because there's a lot of cheap talk out of journalists, right?

Like it's very low cost for someone who's a journalist to claim, you know, I've never seen this level of excitement on from the progressives before.

Like a phrase like that, it's so like immeasurable, unfalsifiable.

There's no

cost to a person when they make that sort of comments.

But if we could say, okay, well, let's hit a benchmark for what energy looks like.

Maybe it's voter turnout and let's bet on that instead of just like making up that energy is really high right now.

So really powerful tool, I think for cutting through basically nonsense.

Since we talked about Soros, I think of bring up his famous bet.

It was kind of like a bet in a sense, although I think he had it pretty well figured out.

So he broke the bank of England.

So how Soros

made his fortune, I don't know, he might have had other means, well, he must have had other means, so other businesses and other things.

But the famous one in economics was that the Bank of England had a fixed exchange rate for the pound, the British pound.

And the problem with a fixed exchange rate is that if you go to

You can always sell more of your currency to flood the market because you can print it, right?

So you can manipulate it one direction, but the other direction you can't you only have a certain reserves of let's say US dollars in the Bank of England And so if they need to fix the exchange rate and it's and it's falling they need to sell dollars and buy back pounds Well, they eventually will run out of dollars and so the Soros bet was he thought they were at a critical point and he just started he kept buying dollars and selling

And so the Bank of England had to do that and then eventually broke the bank, meaning they ran out of dollars and they could no longer support that fixed exchange rate.

So then once it plummeted, he's holding all of that money to buy him back and make a fortune.

Breaking the bank.

That was essentially a bet.

because presumably he didn't exactly know, although maybe there was data on the amount of dollars.

So anyway, not to get sidetracked too much, but the betting stuff is interesting.

And like you said, it kind of calls people out to be accountable for not just cheap talk, but actually putting their money where their mouth is.

But CNN doing that is impressive.

Now, another one of these betting places, I believe, was starting to enter sports betting.

And so most of these betting markets, as I understood it, I just

saw a good morning, the good morning show, Sunday morning, they were interviewing.

the owners of this betting market and talking about it.

And they were starting to be entering sports betting, which then, of course, DraftKings and all these other ones have to be sanctioned from state to state.

Whereas currently, they're not sanctioned.

And so, again, we've had a recent problems with Chauncey Billups and some NBA stars that were tanking some scores.

And so what do you think are the concerns there?

I think this might be a good spot for our cliffhanger and come back and think, you know, what are ways that we can try to keep people out of swaying it more so?

And I think one of those answers might be with limits, but let's kind of hit that topic and others when we get back.

I'll be back in just a

bit.

Each of these fields is interesting in their own right, but they intersect in ways that are important to understand both individually and for your community.

If you find philosophy fascinating but want to make sure that your study of the subject is practical, if you enjoy economic analysis but want to see how economic laws interact with more principles, if you are interested in politics but want to explore how economic and ethical realities constrain our political choices, you should consider the PPE program at Ottawa University.

This spring, Ottawa University is organizing a PPE League competition or Politics, Philosophy, and Economics.

Students in this competition will compete leveraging the ideas of philosophy, politics, and economics in various events.

If you're a professor or an advisor of college students and you're interested in your school competing in PPE League this spring, contact Peter, Justin, or Russ today.

By 2030, the Gorton Institute will be known for its alumni, supporters, and participants who incorporate economic understanding with their faith in their careers, vocations, communities, and personal lives.

We have some great programming going on for high school students.

We have an online microeconomics class.

Yes, you can earn college credit for $200 by taking an online class.

It's affordable, flexible, layered with support.

Our new online micro is optimized for you.

If you'd like to consider some events for your high school students or that class, please contact Justin, Peter, or Russ today.

Okay, so we're back and continuing on with maybe ways that we can be more comforted with some of these betting markets.

I know that there's algorithms that look for patterns and possibly people who are close to

the network of people that might be in power to sway things like NBA players.

That was somehow detected.

I think that was the FBI working on that one, if I remember right.

But the interview from the Sunday morning group, they also said they have algorithms to try to detect people doing that.

And I believe they also had lit dollar limits.

So it'd be difficult to sway something if

the bets are limited to X amount.

And if there's, you know, just to make up a number, $100,000 worth of bets, and the bets are limited to 500, it'd be more difficult to do that or, you know, limited to 200.

So I don't know what you got thoughts on that one.

Yeah, I think you bring up a good point about the sort of fine line between protection markets and gambling.

Yeah, and here's how I would think about the line because I think there's a line and two minutes ago I didn't as I was like sitting here and talking I was thinking so though I think the most characteristic part of a of gambling is that there's a house and that the house always wins right and so in so far as prediction markets have like the house always wins sort of mentality which to some extent they do I mean these companies do make a cut of everything yeah it is a little bit of gambling right whereas by the way that that's not true necessarily the stock market right there's no

obvious like house for the stock market like you can win and win and win and win

yeah

now I do think the brokers are kind of I do think if you're if you're doing penny stocks or you're day trading you're basically gambling so it's a little more complicated but if you're doing like something that scientifically generates constant basically

To some extent, gambling is in the eye of the holder.

If you have actual information that you know is going to come in, that's not incorporated in the price today, that will be incorporated in the price tomorrow, you're not gambling.

By the way, that also there's legality issues there on whether or not your information qualifies as insider information or not.

But it's kind of beside the point.

My point is just this.

These are pretty close.

What is the difference between a political prediction market, an individual stock market, and a sports betting market?

It's like, there may be degree, but not kinds, right?

These are like very similar ventures.

And so the upside of betting markets is that they do kind of economize and give information out.

And so this was the positive that we were talking about.

But as you're pointing out, there is a negative side of things, which is the influence.

And by the way, this is why, and actually the basketball scandal is the perfect example of the point shaving, is the reason that I tell my students,

you should never gamble on sports.

And it's not because you aren't smart.

It's because there's information that you don't have that other people do have.

And maybe they have it legitimately and maybe they have it illegitimately according to their law.

It actually kind of doesn't matter if they don't get caught, right?

But you don't know if a person's point shaving.

Other people do know that.

You don't know if a person's injury is as serious as the team is reported.

But there are people who are closer to the team or maybe journalists who are closer to the team who do know that, right?

And there are ways that people get that information out.

And actually, I have no problem with speculation.

So none of this bothers me.

But you got to recognize where you are in the market and like you sitting on your couch knowing basketball, like you're not going to beat the sports statisticians out there.

You're not going to beat the people who have team information, whether they showed or shouldn't have that information.

That's why you never do sports.

spending it's also as Russ has pointed out on many podcasts why we don't trade individual stocks right same reason or to the extent which we do

Like it's we keep it a small part of the portfolio, right?

And so this ability to sway these prediction markets is kind of a problem.

And actually, like, you know, I was thinking of an example, they have really silly prediction markets out there.

Like I'll give two examples.

One, I'm going to keep more vague because it's not appropriate for the podcast.

But earlier in the year, there was a certain kind of object being thrown on the court in WNBA games.

Like this was a big news story.

It happened week after week.

And there was a prediction market for is it going to happen this week?

And I thought to myself, like, yeah,

be very easy for a guy who has like zero net worth to like tell one of his friends like hey put you know $40,000 on yes and then he does this thing maybe gets arrested even but like it's if the chance is 50-50 he's making 40,000 bucks off it he splits it with his friend 20,000 dollars to go to jail that's pretty good deal for most people right and so it's like that's a place where like even though

public has an ability.

Another example of this was there was a bet on whether Vladimir Zelensky would wear a suit before the end of the year.

This was like a betting market.

It's like, oh, he's

always in a t-shirt.

Yeah.

Yeah.

And Trump made a big deal out of this.

And so, but why couldn't Zelensky go and tell a bunch of like Ukrainian operatives?

I could go say, go bet.

Yes, I'll do it tomorrow.

And we're going to make a bunch of money for Ukraine.

And like, what's Pauli market going to do?

Like, tell the government of Ukraine to give the money back like they don't have that jurisdiction.

Right.

And so.

Uh, you know, betting markets have the upside of sharing the information and cutting through the nonsense, but they can also be subject to.

certain manipulations.

And like, I do wonder or in worry about, you know, what happens when we talk about like, presidential elections of like, you've got a primary and there's a front runner, and maybe they have a pretty significant like, 40% chance of winning.

What happens when like, people try to do violent things in order to stop somebody from winning and

wanting to

make money, right?

And large organizations could do this.

So Russ, I think you're right.

I think these betting companies, if they are smart, not

if they're moral but if they're smart too they will try to impose limits to prevent this sort of thing because ultimately the first time that we discover somebody did something crazy to win a bet on some betting market is when the betting markets get shut down or like totally state controlled right so betting markets have their upsides they have downsides

On that still think prediction markets are better than journalists.

And so I'm happy with the CNN decision.

Yeah.

But I don't really apart from like, I think in 2016, I made one political bet.

I don't participate in prediction markets because like, I don't have like the people who win in prediction markets are either lucky or have insider information.

I'm not interested in trying to be lucky.

And I don't have insider information, right?

So I'm going to be an observer.

I'm going to free ride off of the information I get from these prediction markets.

Yeah.

And I think that's a benefit to me, but it will come at the cost.

of, you know, some people in some situations for sure.

Well, and I learned before, even when I thought I had inside information, not in a real illegal way.

I lost money anyway, but it's like there's still risk involved.

Maybe it's a little bit lower if you think you have inside information, but sometimes it might not be as reliable as some people think.

All right.

Well, this has been a production of the Gorton Institute here at Ottawa University.

I hope you liked the listen and please pass this along to friends and family that might like to listen too.

So other than that, be fruitful and multiply.

Thanks!

Thanks again, guys.

Tell your friends about the podcast, kxel.com slash Jacobson, J-A-C-O-B-S-E-N.

In the meantime, listen to all the wisdom of Jeff Stein during his weekday news and commentary.

And folks, always remember and never forget to be safe, be smart, be good, be strong, love Jesus Christ, and God bless us.

everyone till we meet again have a great weekend and bye bye