Economics 
Essential
Competition, Regulation, and the Market Process: An "Austrian" Perspective
By Israel M. Kirzner: "The point is that in questioning government regulation, the economist makes no claim for the ultimate moral benignity of market process, or of its results; the relevant issue is strictly the effectiveness with which the system serves the goals of its individual participants."
Milton Friedman on "Greed"
In an interview with Phil Donahue, Milton Friedman explains why societies have historically always flourished when they've embraced a political and economic system that encourages economic self-interest -- "greed."
Project on Social Security Choice
The Cato Institute's experts examine the problems facing the current social security system, the methods that can be used to move towards a system of personal retirement accounts, and the effects that a new system would have on workers.
The Layman's Guide to Economics
Five easy lessons to master free market economics, without math or graphs.
Independent Study Guide: Economics
Liberty Guide offers a comprehensive resource for the independent study of economics. The study guide provides access to articles and reviews, online publications, blogs, associations, book recommendations and more. This guide is an indispensable tool for aspiring students of liberty.
I, Pencil
By Leonard E. Read: "A charming story which explains how something as apparently simple as a pencil is in fact the product of a very complex economic process based upon the division of labor, international trade, and comparative advantage."
The Use of Knowledge in Society
By Friedrich August von Hayek: "One of Hayek’s most important contributions to economic theory is his demonstration of the part prices play in disseminating widely diffused knowledge about consumer demand and the availability of economic resources in order to make rational economic calculation possible."
Globalization Is Grrrreat!
Tom Palmer brings the globalization debate to the solid grounds of reason, and provides a series of arguments against the most common fallacies.
The Freedom Philosophy
This anthology includes 14 essays on the political, economic, and moral foundations of a free society. These classic writings by Leonard E. Read, Frank Chodorov, Benjamin Rogge, F. A. Harper, among others, demonstrate the superiority of individual choice and capitalism over any forms of collectivism.
Economic Freedom and Peace
"Since before the time of Thucydides, states have used wealth to acquire more territory and to dominate the affairs of their neighbors. Understanding the reasons that the powerful countries of today are less prone to dispute than their predecessors is critical to maintaining the peace and to extending its benefits more broadly."
Economics in One Lesson
By Henry Hazlitt: "This primer on economic principles brilliantly analyzes the seen and unseen consequences of political and economic actions. In the words of F.A. Hayek, there is "no other modern book from which the intelligent layman can learn so much about the basic truths of economics in so short a time."
Opening the Door to the Economic Way of Thinking
By Russell Roberts: "Here are ten fundamental ideas to help you explore and understand the world around us using the economic way of thinking. "
Entrepreneurs Are the Heroes of the World
By Johan Norberg: "The amazing fact is that entrepreneurs and innovators and businesses have turned luxuries that not even kings could afford into low-priced everyday items at your local store. That is the best defense of capitalism."
Twenty Myths About Markets
Tom Palmer subjects popular fallacies about the market system to the critical scrutiny of economics and ethics.
The Concise Encyclopedia of Economics (CEE)
This encyclopedia contains articles by leading economists on basic concepts, economic systems, schools of economic thought, macroeconomics, economic policy, taxes, money and banking, economic regulation, environmental regulation, discrimination, labor issues, international economics, corporations, financial markets, the marketplace, the economics of special markets, economies outside the U.S., and biographies of famous economists.
The Tide in the Affairs of Men
By Milton Friedman and Rose D. Friedman: "The aim of this brief essay is to present a hypothesis that a major change in social and economic policy is preceded by a shift in the climate of intellectual opinion. The intellectual tide is spread to the public by all manner of intellectual retailers: teachers and preachers, journalists in print and on television, pundits and politicians. "
Selected Essays on Political Economy
By Frédéric Bastiat: "Bastiat directed his arguments against certain ever recurring fallacies as they were employed in his time. Few people would employ them today quite as naively as it was still possible to do then. But let the reader not deceive himself that these same fallacies no longer play an important role in contemporary economic discussion: they are today expressed merely in a more sophisticated form and are therefore more difficult to detect."- F.A. Hayek
Economic Sophisms
By Frédéric Bastiat: "Bastiat was not primarily an original economic theorist. What he was, beyond all other men, was an economic pamphleteer, the greatest exposer of economic fallacies, the most powerful champion of free trade on the European Continent."- Henry Hazlitt
Frederic Bastiat - What is Seen and What is Not Seen
There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen. Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil.
Public Choice Theory
By Jane S. Shaw: "Public choice takes the same principles that economists use to analyze people's actions in the marketplace and applies them to people's actions in collective decision making."
Socialism: An Economic and Sociological Analysis
By Ludwig von Mises: "This book must rank as the most devastating analysis of socialism yet penned… . An economic classic in our time." - Henry Hazlitt
Intellectuals and Socialism
"In 1949, Hayek attributed the dominant position of planning in the West to the role of intellectuals, by which he meant 'professional second-hand dealers in ideas' such as journalists and commentators."
The Calculus of Consent
"The Calculus of Consent: Logical Foundations of Constitutional Democracy, by James M. Buchanan and Gordon Tullock, is one of the classic works that founded the subdiscipline of public choice in economics and political science. To this day the Calculus is widely read and cited, and there is still much to be gained from reading and rereading this book."-Robert D. Tollison
Why Do Intellectuals Oppose Capitalism?
By Robert Nozick: "Wordsmith intellectuals fare well in capitalist society; there they have great freedom to formulate, encounter, and propagate new ideas, to read and discuss them. Their occupational skills are in demand, their income much above average. Why then do they disproportionately oppose capitalism?"
Recommended
Does U.S. Interventionism Cause Cheap Oil?
In the most recent entry in our Ask the Expert column, Cato energy and environmental policy expert Jerry Taylor addresses the issue of how U.S. military involvement in the middle east impacts oil prices. Taylor explains that U.S. military presence -- while conventionally would appear to add security and therefore lessen industry risk, leading to lower prices -- acts more as a substitute for what would take place without it than as a uniquely stabilizing force.
Scholarships for Online Economics Courses
National University in La Jolla, CA is offering a limited number of scholarships that cover the full expenses of tuition and application fees for several online courses in Free-Market Economics and the Philosophical Foundations of Capitalism. This program provides students the opportunity to explore the ideas of liberty in a strong academic setting with limited barriers to entry. Check it out today!
John Mackey on the Morality of Business
Students For Liberty and the Atlas Network have just released a video interview with Whole Foods CEO John Mackey in conjunction with their new Morality of Capitalism project. Check out the video, and order your free books here: The Morality of Capitalism: What Your Professors Won't Tell You.
U.S. Debt and the Millennials: Is Washington Creating a Lost Generation?
Join us Thursday, August 18th at 6:30pm for our final event of the summer! With all the craziness of politics and the economy, it is a tumultuous time to be a young American. So we've put together a panel of young journalists and experts to discuss: How will mounting deficits impact today's young people in the years to come?
Panelists include: Matt Yglesias (Center for American Progress), Megan McArdle (the Atlantic), and Matt Mitchell (Mercatus Center).
Register for the event here, or watch it live online.
Absurdity of Government Intervention
McDonald's has recently announced major voluntary changes to one of its staple items: Happy Meals. On the flip side, Campbell's is putting salt back into its soups, based on customer feedback. Cato senior fellow Walter Olson explains the correlation between these two changes: "In a sense, both these stories illustrate a basic process of capitalism at work: Businesses are always experimenting with their offerings in hopes of staying current with consumer trends." Contributing to the health of their customers is a driving force in a business, and they have the incentive to make the right decision even without government intervention. Unfortunately, government meddlers continue to intervene in regulating food items based on so-called scientific results that are far less than definitive.
The Morality of Profit
The morality of profit-making has long been a subject of extensive debate, with religious and moral philosophers falling on both sides of the issue. In the below video, Cato senior fellow Tom Palmer clearly provides a defense of profit as a moral act.
Calling the President's Bluff
Republicans should not force President Obama to propose a budget that reflects their ideas, because it is clear that each side has a drastically different view of the role for government in society; rather, they should force him to present an honest budget effort, and then judge him on its result, says William Poole Cato senior fellow and former CEO of the St. Louis Fed. By doing so, if Obama doesn't submit a budget, the responsibility for default would rest on him. Poole advises that, "Republicans should emphasize that the debt ceiling issue is not about the substance of how to address the deficit, but that the president present a plan voters can judge."
'Cash for Clunkers' Still Clunking
In a recent Cato post, senior fellow Walter Olson explains how a popular government program continues to damage the poor, and increasingly threatens the middle class, too. In the wake of the "cash for clunkers" program and record high gas prices, more Americans are burdened with financial woes regarding transportation (in fact, some used cars are worth more now than they were new). When it’s already hard to find a job, facing additional barriers to transportation imposed by ill-advised government programs is not a comforting thought. This leaves Olson saying, facetiously, “Nice going, Washington.”
Fight of the Century: Keynes vs. Hayek Round Two
Economist Russ Roberts and multimedia producer John Papola again combine pop culture and solid economic theory in a creative rap battle between F.A. Hayek and John Maynard Keynes, which takes place in a boxing ring. For the first installment, watch it here.
Are Smugglers Heroes?
Walter Williams, economics professor and syndicated columnist, notes that "Government tyrants want to either prevent or interfere with peaceable voluntary exchange among individuals," and smugglers "reduce the impact of that interference." From molasses taxes in the early 1700s to cigarette taxes in today's economy, governments have enacted limits on peoples' freedoms. And smugglers are quick to swoop in and meet the demand. The downside is that smugglers bring along crime and erosion to a nation's rule of law. So while smugglers may appear to be heroes, it would be best to simply have the government and moral crusaders step out of the way.
For a Reason.tv interview with Walter Williams on his new book, Up From the Projects, see here.
EVENT: Video Sneak Preview
Cato On Campus is hosting a sneak prieview of Swedish economist Johan Norberg's new documentary on globalization and economics, Free or Equal: A Personal View. Register to join the event at the Cato Institute on Friday, April 29th at 4:00pm.
Here's a bit of a teaser:
Obama/Boehner's Phony Spending Cuts
When the debate about spending cuts refers to only slowing the increase of the annual budget, we've got a major problem. Check out Cato's newest installment of scary-but-true Washington politics.
Study: Imports and Trade Deficit not a Drag on Growth
In a new study, released by the Cato Institute’s Trade Policy Director Dan Griswold, the case is laid out why imports and a trade deficit are not negative factors of economic growth and why they are, in fact, a boost to the national economy. The study analyzes the past 30 years of U.S. trade policy and outcomes, finding that economic indicators such as "stock market appreciation, manufacturing output, and job growth were all significantly more robust during periods of expanding imports and trade deficits." This Trade Policy Analysis serves as an excellent empirical study applicable to academic topics ranging from economics to political science to foreign policy.
China: Wealth But Not Freedom
Perhaps no other country's economy in the past 50 years has grown as remarkably as China's. Yet Cato scholar James Dorn explains that while China can be proud of its "rapid economic progress," the country "has gained wealth but not freedom." The Chinese ruling elites still prefer to be the gatekeepers of control, building a great wall around the ability for the Chinese people to pursue the rights that other people in liberalized countries hold. Making his case that China's rising economic prowess does not necessarily mean freedom, Dorn uses the words of China's own Lao-tzu: “harmony cannot be forced; it must be natural."
Green Energy Economy Reconsidered
A "green economy" utopia is a popular dream in the minds of people across the ideological spectrum. However, Cato scholars Peter Van Doren and Jerry Taylor note that this is less a dream than a memory of the distant past. The main technologies being advocated for today's green revolution are the same technologies employed in the 13th century and before. Comparing lifestyles between then and now should be enough to make one reconsider returning to that route. If that doesn't work, Van Doren and Taylor offer five reasons why pursuing a reenergized portfolio of entirely green initiatives is neither feasible nor economical.
Students Who Get It
John Stossel recently filmed an episode of his television show at the International Students For Liberty Conference, held in Washington, D.C., along with Cato Institute vice president David Boaz. In an article on the experience, Stossel remarks that the students really "get it." What do they get? He explains that, "(There) were hundreds of students who actually understand that government creates many of the problems, and freedom—personal and economic liberty—makes things better." In the midst of economic crisis, foreign war, and political riots, find out why Stossel claims that "After spending time with those students, I feel better about the future of America."
Don't Just Blame the Government
Cato education scholar Neal McCluskey details how education spending in the U.S. has doubled in the past 40 years without seeing increases in education outcomes. In fact, results may have become worse. However, we can not blame the government entirely. No matter how bad public education has gotten, Americans' gut reaction to any discussion of spending cuts is outrage, so even principled politicians think twice about proposing reforms. McCluskey notes that the problem is that Americans don’t know how bad the situation is, because, “as with most things you buy, people generally expect that spending more on education will get a better product.” Throwing money at structural problems will not fix them, but it will waste scarce resources. In contrast to blank-check reforms, McCluskey explains the details of the problems and offers solutions to address them.
Are Soccer Stars Inherently Libertarian?
What does soccer have to do with libertarian principles? Apparently, the world's most popular sport proves free market economic theories correct. Dan Mitchell, Senior Fellow at the Cato Institute, explains that a recent study by scholars (who usually write about un-libertarian social welfare issues) shows that international soccer stars are very sensitive to nation's tax policies. Since soccer stars can vote with their feet, watching their behavior as it relates to shifting policies provides a clear lesson: countries with low, flat tax rates attract better soccer players. The study even shows that lowering taxes can in some cases actually raise total tax revenue because of the influx of high earning players. The Laffer Curve scores again.
'Wealth of Nations' Turns 235
This month marks the 235th anniversary of the publishing of the Wealth of Nations, the famous work by Adam Smith that laid the foundation for modern economics. From the conception of GDP per capita to making the case for division of labor, the Wealth of Nations, though half a millennia old, contains many topics still worth considering today. In tribute to a book that changed the world, the Adam Smith Institute, a leading libertarian think tank in the United Kingdom, notes that "(Smith's) greatest breakthrough was the realisation that we do not have to grow or make things in order to increase our wealth. We can also increase it by simply exchanging things."
Are We Running Out of Resources?
Economist Steve Horwitz addresses the above question with a quick lesson in how decisions are made in the global economy. He explains that a free market allows prices to signal producers, consumers, and entrepreneurs.
Four Reasons Why Big Government Is Bad Government
In this Economics 101 video created by the Center for Freedom and Prosperity Blayne Bennett from Students For Liberty explains that excessive government spending undermines prosperity by diverting resources from the productive sector of the economy. Moreover, the two main ways of financing government -- taxes and borrowing -- cause additional economic damage.
Cato Scholars Evaluate State of the Union Address
A group of Cato scholars -- ranging in discipline from education to foreign policy to economics to health care and more -- analyze President Obama's State of the Union speech. They evaluate the strength of his policy positions, including what he did well and what he could do to improve.
40 Minute Crash Course in Economics & Politics
Want some bullet points for instances of government gone wrong? Check out Cato's David Boaz and Michael Cannon on FOX's "Top 10 Promises Gone Wrong" with John Stossel. Stossel, Tanner, Boaz, and others highlight government inefficiencies, economic falacies, and misleading legislation in an excellent crash course in economics.
Story of Business: Competing for a Future
In part 3 of their "Stories of Business" series, the folks at Bankrupting America highlight Mike, a small business manufacturer. Mike describes the uncertainty and negative reality of government overreach into the economy, while also demonstrating the American spirit and entrepreneurism that has contributed so much to economic growth.
The Five Worst Op-Eds of 2010
For Gene Healy's last column of the year he channels his inner Scrooge to name the worst op-eds of 2010. Healy looked for bad arguments, bad writing, and bad faith, awarding extra points for warped values. Check out the worst of the worst.
Peace On Earth, Free Trade For Men
This oldie but goodie from Cato trade policy expert Daniel Griswold argues that the gifts stacked under the tree might actually play a substantial role in creating lasting peace on earth and goodwill to all. Free trade encourages people and nations to live in peace with one another, raises the cost of war by making nations more economically interdependent, makes it more profitable for people of one nation to produce goods and services for people of another nation than to conquer them, and, by promoting communication across borders, trade increases understanding and reduces suspicion toward people in other countries. It seems it’s better to give and receive!
Consumerism Is Keynesianism
"One of the most pernicious and widespread economic fallacies is the belief that consumption is the key to a healthy economy," says economics professor Steven Horwitz, explaining that, in fact, "this belief is an inheritance of misguided Keynesian thinking." Horwitz goes on to demonstrate that the real way to drive an economy is to provide producers -- who develop products, provide jobs, and supply our needs -- with the proper system of confidence. "Wealth is created through acts of production that rearrange resources in ways people value more than alternative arrangements," not by encouraging people to spend all their (our?) money on what already exists. At its root, consumerism was fostered by Keynesian ideas. Therefore, those who equate capitalism with consumerism need some education.
Economic Building Blocks
In the age of computers and jet planes, it seems a mystery that billions of people are still devastatingly poor. In his recent conlumn, John Stossel says that the reason for this is found in the work of developmental economist Hernando de Soto. Stossel, channeling de Soto, explains that the system of property rights and rule of law, while simple, is powerful because it allows planned interactions between strangers to happen when it otherwise would not. Just because the system is relatively simple, however, doesn't mean it's easy. And in fact, Stossel notes, the U.S. is liable to loose its productive system because many Americans (including our politicians) no longer grasp the nature of these fundamental concepts. So while parts of the developing world are starting to get the picture, the richer countries need to learn from their past so they don't degenerate.
Government Doesn't Create Jobs, Silly
Former Cato intern and current George Mason University economics student, Meg Patrick, gives a real quick lesson in why the general public (and the government) should respect private enterprise. She also explains what happens when the government prints money and taxes people. Check out GMU's Students For Liberty blog here!
How Much Freedom is "Sufficient"?
Advocates of liberty spend much time working in opposition to expansive governments and their programs, with the mental model that the two concepts are mutually exclusive. However, economics professor Donald Boudreaux makes the controversial statement that, "I don’t believe that the welfare state, or the regulatory state, inevitably leads to widespread poverty or to oppressive collectivism." He further argues that his approach actually more strongly bolsters the moral case for freedom. Check out Boudreaux's look at historic "reality" and the case he makes for "sufficient" freedom.
End the Fed?
The Fed, while being a private entity, is tasked with some major responsibilities in managing the American monetary system and economy. Cato scholar Richard Rahn, a former presidential economic advisor, weighs in on what's wrong with the Fed and what to do about it. He notes that, on the surface, if we didn't know better, we'd think "the elected officials are trying to sabotage the economy." But that is just a reality of the often mutually exclusive goals of the Fed. In fact, Rahn says, "The Fed is in an impossible situation. It has been given multiple targets — i.e., a constant-value dollar, bank stability, consumer protection and full employment — plus being required to outguess the market." He highlights that the Fed has historically had trouble accomplishing any of these tasks, and concludes with a perplexing question, "Why are we keeping a failed institution?"
What Causes the Economic Pie to Shrink?
At a time when the economy is impacting Americans’ holiday budgets, the U.S. government is contemplating increases of both taxes and unemployment support. That, according to Cato's Michael Tanner, causes the economic pie to go in the opposite direction than we desire, shrinking rather than expanding it. "We know that in the long run, the best way to reduce poverty is to create more jobs and opportunity. Too many think of the economy as a fixed pie, and the role of government is to divide up the slices of that pie," says Tanner. If we are truly trying to aid the poor and increase general welfare of all Americans, we should embrace the policies that reduced poverty from 75 to less than 20 percent over the past century.
Why Is There a Third World?
Cato On Campus Event: Thursday, Dec. 2, 2010 at 3:30pm. Register here.
Economic development is one of those topics that is bound to incite heavy conversation among passionate people from many backgrounds. Many claim that foreign aid is necessary and just. Yet others cite that development is hampered by intervention -- even "free" money -- that distorts local markets. At this Cato On Campus event, 'Why Is There a Third World? Explaining Persistent Poverty in Africa and What's Being Done about It,' come hear the breakdown of ideas and contribute to the discussion. Scholars from the Cato Institute, Mercatus Center, and USAID will discuss and debate the case of development in Africa.
The event will be followed by a special holiday party in Cato's Winter Garden.
Obamanomics Leaving World Nervous
Economic recovery in the U.S. continues to be elusive, ever since the global economic collapse two years ago that was brought on by bad policies among various external factors. As Cato senior fellow Dan Mitchell notes, to get back on track to growth, stability, and prosperity, the U.S. needs to adopt sound policies that are proven to accomplish that goal, or – at least – not pursue policies that have proven to fail. However, that seems to be difficult for the current administration. With several examples, Mitchell makes his case that, “Ironically, the rest of the world has learned that easy money and deficit spending are a bad recipe, yet the White House somehow thinks that going back to Jimmy Carter's policies is the right approach for America.”
What Republicans Can & Can't Do
Michael Tanner, a senior fellow and health care reform specialist at the Cato Institute, lays out what Republicans can and can't do regarding the healthcare bill that congressional Democrats forced to passage this past spring. More than reveling in their symbolic victory, Republicans need to work around the barriers erected by Democrats, the president, or legal procedure. Forcing Dems to answer specific questions on-the-record removes deniability and encourages accountability. Tanner notes that complete repeal is quite unlikely before 2012, but Republicans can responsibly represent voters' discontent by beginning "the step-by-step dismantling of ObamaCare," adding free-market reforms or defunding it entirely. A lot has changed now that the “power of the purse” has changed hands.
The Kid and the Benevolent Bully
The epic tale of kids vs. bullies continues daily, except now it occurs on the playground called the American economy. In an enlightening and clever allegory, Roger Koopman draws a link between government and entrepreneurs, explaining how bullies live off the productive power of others and end up stunting economic growth. With particular effectiveness, Koopman demonstrates why, though hindered by it, many regular citizens are tricked into supporting such a defunct system. For some insight and humor, be sure to check out this short article/story.
Old Stealing from Young under Obama's 'Reforms'
Cato's Gene Healy likens American youth to the rioting masses of French youth who are decrying marginal austerity attempts, protecting their parents’ and grandparents' generations over their own interests. With both countries facing burgeoning public debt, youth are energetic about advocating big government provisioning programs (e.g. pensions and universal healthcare), which they will be forced to support but will never receive. Healy asks, humorously, “Are America's youth as dumb as the French?” He notes that while American youth seem less prone to riot in the streets than their French counterparts, they are widely unimpassioned about politics -- leading one to wonder which is better, active though misplaced engagement or apathetic acquiescence? Either way, substantive change cannot occur until “younger voters wise up and start defending their interests.”
Austrian Economics - A Primer
The Adam Smith Institute has released another excellent book for students, breaking down the Austrian school of economics into short passages of simple language. 'Austrian' economics has revolutionized our understanding of what money is, why economic booms invariably turn to damaging busts, why government intervention in the economy is a mistake, the importance of time and information in economic decision-making, the crucial role of entrepreneurship, and how much economic policy is just plain wrong. Eamonn Butler explains these ideas in straightforward, non-technical language, making this Primer the ideal introduction for anyone who wants to understand the key insights of the Austrian School and their relevance and importance to our economic situation today.
How to Balance the Budget without Raising Taxes
A new video by the Center for Freedom and Prosperity Foundation, presented by Cato scholar Dan Mitchell, debunks the statist claim that the federal budget can only be balanced through massive tax hikes. Even though a better policy would be to limit the size and scope of government instead of taxing to fund all current programs, this video shows that balancing the budget is easily achievable with a modest amount of fiscal restraint - even if the 2001 and 2003 tax cuts are made permanent.
Congress Can't Repeal Economics
In his weekly column, John Stossel explains that no matter how hard Congress and other politicians try, they can’t beat the laws of economics. Bent on keeping their grand promise to “cover more for less money” with the new healthcare bill, politicians are being rebuffed by private companies responding to market forces, who are dropping extensive demographics from coverage in response to the bill. Public bureaucrats are crying foul, but Stossel notes that responding to economic realities is not calloused; it’s responsible – responsible to customers, shareholders, and the American public.
How Does Your Governor Rank?
Cato has recently released the new "Fiscal Policy Report Card on America's Governors," an annual report that grades all 50 state governors' job performance based on fiscal responsibility. Cato scholar Chris Edwards examines the tax and spending decisions made by governors since 2008. Governors who have cut taxes and spending the most receive the highest grades, while those who have increased taxes and spending the most receive the lowest grades. Only four governors were awarded an "A" in this latest report card -- how does your state's governor rank?
Recipe for Irresponsibility
In a recent New York Times article, William Cohan questions the nature and necessity of the Bureau of Consumer Financial Protection. The new bureau is intended to look after consumers, making sure that they are not taken advantage of in “unfair, deceptive, or abusive” interactions with financial products. Further clouding the issue, poised to lead the bureau is Elizabeth Warren, a Harvard law professor and former TARP overseer who was appointed without Senate approval, via a legal loophole. The new bureau is estimated to cost around 500 million dollars, or up to 10% of the Fed’s budget. Cato scholar Chris Edwards has advised, “Unless today's massive deficit spending is reduced, the nation is headed for a fiscal calamity. The freedom and prosperity of young people will be crushed by debt.” The bottom line, as Mr. Cohan puts it, is that the creation of the bureau spends money when we can’t afford it, appoints a leader with conflicts of interest, and “gives us all yet another excuse to avoid taking responsibility for our own actions.”
Fiscal House of Horrors
It's October, the month of FrightFest, scary movies, and things that make you scream. Considering the status of the economy in the U.S., it seems rather fitting. In light of that, Reason has released its monthly magazine along with several video clips documenting the downright scary 'Fiscal House of Horrors.' And to make the fright even worse, they're in 3D! Check out the three installments: I Spend on Your Grave!, Night of The Living Debt, and Attack of The Killer Compensation. (The videos are also available in 2D here.)
The Hayek Interviews
This remarkable collection of interviews with Nobel Prize winning economist F. A. Hayek was only recently released. It is an invaluable resources for anyone interested in delving deeper into the ideas of one of the greatest scholars of the twentieth century. And it's searchable!
American Exceptionalism: The Great U-Turn
Has the U.S. prospered because of “American Exceptionalism,” or could other factors be at play? James Bennett outlines an excellent history of why America differs from most other developed, English-speaking countries. The reason for the successful growth of the U.S. economy over the past 50 years directly relates to its turn from popular and trending socialism and its embrace of markets – supported democratically and legislatively. This was a practical U-turn from where most developed societies were headed in the mid-20th century. While the “socialism gap,” as Bennett calls it, has narrowed recently due to much of the world shifting toward freer markets and the U.S. expanding its progressive policies, the nurtured nature of the American public is to buck extensive government oversight and react democratically to correct things (i.e. Look out in November).
The Starfish and the Spider
The Tea Party has lately become the topic of many articles, news stories, and conversations. Cato On Campus hosted an event on the issue last month (video here), and last week the Cato Institute hosted Dick Armey and Matt Kibbe of FreedomWorks to discuss their recent book, ‘Give Us Liberty: A Tea Party Manifesto,’ and the rise of the Tea Party (video here). Many are commenting on how the Tea Party grew into a national phenomenon. In that vein, the National Journal has an article that documents several aspects of the Party’s playbook and history. One thing the story discovers is that at the foundation of this political movement is, in fact, a business book, titled: The Starfish and the Spider. Check out the article and 2 minute video!
Double Taxation Bonanza
The Obama administration is at it again. With two new initiatives the Obama administration is seeking to raise the tax on capital gains by almost 10%, to 23.9%. But the capital gains tax is already a double tax for being productive. Christina Sochacki, a third year law student at George Washington University, explains why in this Center for Freedom and Prosperity video:
The Center for Freedom and Prosperity has a large video library of quick economics lessons, available here.
Growth: Jobs, Spending, Sunsets
American Action Forum is hosting an event on Tuesday morning, September 21, at 9am on Capitol Hill.
An excerpt from the event page: "The Congress faces two imperatives and a choice. It must support job creation and it must solve the fiscal crisis. It also faces a decision on raising taxes at the end of 2010. In Washington, it is all too often that two people cannot agree on the right direction to go. Join us and our distinguished panel as we discuss options for future economic growth."
Does Spending Create Prosperity?
In a recent article, George Mason University economist Russ Roberts addresses the question of how top-down macro policies impact bottom-up economic growth. He questions the logic that spending resources could generate prosperity, stating that it's prosperity that drives spending. To move away from a theoretical discussion, Roberts uses two examples with empirical evidence: WWII and foreign aid. Both cases show that artificially inflating an economy with government spending only lasts a short while, and has minimal, if any, long-term impact. Foreign aid specifically shows that the political elite and interest groups are the ones who benefit most, at a cost to others.
"With Due Respect, Mr. President..."
The Cato Institute ran full-page open letter to President Obama in several national papers this week, reaching millions of readers with its message. What's so important that this campaign was worth running? The ad reports that federal spending is threatening to plunge the U.S. into further insolvent debt and unfunded liabilities, even threatening to destroy the American dream. The piece lays out a list of specific policy changes to get the U.S. back on course for economic growth and "fiscal sanity."
Check out the ad, and Cato's DownsizingGovernment.org, for specific policy considerations.
Debating Our Fiscal Future
The American Action Forum recently participated in a debate on progressive vs. conservative policy responses to the U.S. budget deficit.
Panelists included John D. Podesta (Center for American Progress) and Douglas Holtz-Eakin (American Action Forum), and was moderated by Jim Tankersley (National Journal). The event was this Tuesday, September 14th, at George Washington University.
The video of the debate has been archived here.
Are Imports a Boon or Bane to the Economy?
Cato trade scholar Dan Griswold addresses the common misconception that rising imports and a trade deficit are bad for economic growth. He demonstrates that imports actually benefit the economy, particularly as half of imported goods are used by producers to create more advanced products, which in turn add much more to economic growth. It's often forgotten, Griswold notes, that "the dollars we spend on imports quickly return to the United States" via purchase of American products or through investments. Those who decry the so-called trade deficit are stuck in misguided Keynesianism, neglecting that every time imports have fallen in the past 50 years the economy has receded.
Obama & Jobs: Expect the "Unexpected"
As President Obama initiates a new push on growing the economy, a look at his track record may shed some light on what to expect. Cato scholar Jim Powell explains that the Obama administration and Democrats in Congress have said "jobs, jobs, jobs" but have instead enacted the most progressivist -- and anti-job -- agenda in recent history. Powell documents a litany of offenses Obama has committed against the American economy. If Obama truly wants to focus on jobs, he can make great progress by simply reversing everything he's done so far. But, Powell notes, that would mean he'd have to dump his progressivism, and that is not to be expected.
How the American Public Views Its Government
Government spending watchdog group Bankrupting America posts a new video about public opinion and government, specifically focusing on stimulus spending. For more imformation on out-of-control government and what can be done about it, visit Cato's Downsizing Government website.
When History Isn't History
Economics professor Steven Horwitz emphasizes that an accurate understanding of history is paramount in a classical liberal’s approach to change people’s minds. Public knowledge of history shapes people’s views toward policy change; but since history is often misconstrued, many support bad policies for rational (though misplaced) reasons, says Horwitz. He then uses common narratives of the New Deal and how the West got rich to explain that “at the bottom of most disagreements with classical liberalism lies a bad reading of history.” How do you stack up to the narratives Horwitz dissects?
Why Hollywood Loves Democrats
In a very creative piece reminiscent of F.A. Hayek's critique in 'Intellectuals and Socialism,' former Cato intern Prateik Dalmia writes that Hollywood's love for Democrats can be traced to actors' feelings of guilt that they rose to stardom by doing relatively little to merit it. Dalmia explains that "what Hollywood fails to realize is that markets allocate rewards not based on individual merit but on the value individuals produce for others.” For that reason Hollywood tends to distance themselves from Republicans – and even libertarians – and find a home in Democrat policies. Until Hollywood understands what makes free markets more efficient and, indeed, more fair than other systems of governance, it will continue to support liberal doctrine – and that is no happily-ever-after.
Private Enterprise Does It Better
"Free enterprise does everything better," is the claim John Stossel makes in an article on privatization. The government is often seen as the default provider of all sorts of so-called public goods. Stossel uses the example of privatization in the transportation industry to show how entrepreneurs improve social well-being by taking risks that pay off. From toll roads, to maintenance, to accident prevention, private parties demonstrate that private entrepreneurs improve conditions and save money in the process. Government acts on the premise of making social order, while the free market relies on catering to the people. Stossel's examples demonstrate that "freedom and responsibility triumph." If we could get government out of the way, imagine the better services, lower taxes, and fewer intrusions in our lives.
What Drives the Economy?
Consumer spending, often heralded as the leading indicator of an economy's health, is nothing more than an indicator of real driver of the economy: investment. Long time investment advisor and former Foundation for Economic Education president, Mark Skousen explains how, when counted correctly, "consumption represents only about 30 percent of the economy, while business investment represents over 50 percent." Consumers are the ones who ultimately buy things businesses produce, but entrepreneurs rely on investment to discover new markets and to develop new technologies. In fact, Skousen remarks, we have personal savings and investment to thank for such things as personal computers, SUVs, the Internet, and the iPhone.
Degrees Are No Substitute for Experience
Cato scholar Dan Mitchell analyses Obama’s track record on improving the economy. He notes that the Obama administration sets the record for having the least private sector experience. And, sad to say, their private sector inexperience has not been offset by their academic experience. In fact, the Obama administration has done a fairly good job doing exactly the opposite of what it claims to pursue. Mitchell states that for businesses to contribute to the economy, they need confidence that their efforts will be awarded and not punished or hindered – and taxes, restrictions, and bureaucracy are not the way to do that.
Freedom University Podcast Available
The Foundation for Economic Education recently held Freedom University, their annual weeklong seminar. Now you can enjoy lectures from cutting-edge scholars right in your own home! This podcast series includes 16 recordings from the seminar on topics like “The Freedom Philosophy” and “The Morality of Capitalism.”
Greece: The Canary in the U.S. Coal Mine?
Writing in the July/August edition of The Freeman, Professor Steven Horwitz clearly describes what is going on in the world economy of deficits, debt, and big government spending –- and does so in a way that doesn’t require a degree in economics. He explains the process by which a country goes bankrupt through bad economic policy and democratic politics, describing in detail what happened to Greece and how the U.S. may be facing a similar situation in the near future. Horwitz draws the analogy that, “Like a canary in a coal mine, the crisis in Greece should serve as a warning that polluting the fiscal air with large budget deficits, a growing public sector, and high debt-to-GDP ratios is a sure way to kill an economy.”
Entrepreneurship Helps Make America Great
As a former business reporter, John Stossel has seen a great deal of what makes businesses thrive, and in this article describes how entrepreneurship is a key to America's prosperity. In America, different than many other countries, failure in business is an opportunity to start over and try again, not something to be ashamed of. In fact, the U.S. Constitution even includes several protections for entrepreneurship. However, the modern economy and business environment are not without challenges, as Stossel states that “Unfortunately, bureaucrats are threatening this good part of America.”
Sweden: A Supermodel for America?
To the American mind there may be nothing more quintessentially Swedish than the leggy, blond supermodel. This video from reason.tv explains that there's another Swedish model that inspires almost as much admiration—the Swedish economic model.
Learn more about Sweden's efforts to reduce the size and scope of government here.
The Myth of the Model
“Most people don’t notice it, but “model” may be the most dangerous word in the English language right now. Models justify a lot of the bad policies that have been, or soon will be, foisted on us,” says Max Borders, writing in the June 2010 Freeman. Explaining how society has come to rely on models, and how that reliance has come to cripple us, Borders says “economies are not pumps to be primed, but economic ecosystems. Economists are thus notoriously bad at predicting, much less planning, economies.” Therefore, he advocates that, moving forward, economics should focus on the fundamentals, not magic models that carry an air of accuracy but are most often defunct in reality.
Are We Still 'Free to Choose'?
In a throw-back article on Milton Friedman's seminal work, 'Free to Choose,' John Stossel recounts the value of Friedman's 1980 argument and reasserts its relevance today. "If we are free to make our own choices, we prosper. That was a new idea to many back then," says Stossel, adding that 30 years later American and other nations "still have not learned Friedman's lesson." Stossel notes that of particular importance to the freedom to choose is being forced to suffer and live with consequences of one's choices. What, then, would Friedman have thought of America's recent propensity for bailouts?
Stop the Federal Spending Spree
Cato budget analyst Tad DeHaven calls for action on an issue that, as he notes, has many Americans up in arms. The government has massively increased both spending and the amount of publicly held debt, to levels not seen since the end of WWII. The problem is, DeHaven remarks, that the WWII spending ended with the war but the current spending crisis is due to European-style entitlements, which will only increase over time. DeHaven states that, "at a time when citizens are warning both parties to stop their fiscally profligate ways, Republicans need to do more than just say "no."" Several congressmen have made moves in the right direction, but real leadership is needed to make real change happen.
The Great Prosperity Machine
Cato senior fellow Tom Palmer explains international trade in under three minutes. He explains that while many decry trade as unfair or harmful to a local economy, in fact, “Trade is like a machine that allows farmers to convert oranges into telephones, and allows factory workers to convert their products into oranges, clothes or whatever they want.” The benefits don’t stop there, as Palmer notes that “Peace is the natural effect of trade.”
Learn more about the French writer and economist, Frederic Bastiat, here.
Public School Bailout Bad News for Americans
In response to a proposed $23 billion bailout for public school employment, Cato education scholar Andrew Coulson illustrates that public school employment has dramatically increased over the past 40 years while student performance has shown no growth. If public schools lobbyists are claiming that more teachers are needed to ensure education levels, the data don't back them up. Coulson notes, “Throwing billions more at the system would only worsen the problem and delay the solution, which is to help ease the transition of these workers from their current unproductive employment back into the productive sector of the economy.” Perhaps there's a more effective way to improve education. One such example is the school choice revolution currently emerging in Florida, as documented by Cato's Adam Schaeffer here.
Too Many Gov't Employees Getting Too Much money
Cato scholar Dan Mitchell discusses the explosion of public sector employment, pay, and benefits. Among other things, government jobs offer higher wages than the private sector, lower termination rates, greater pensions and earlier retirement, and extremely low attrition rates -- all at taxpayers' expense. Government is far too big, and it's costing far too much.
Forthcoming Death Panels in the U.S.?
Claims of “death panels” were derided as far right-wing lunacy when the Obamacare legislation was being debated over the past year. However, Cato health policy scholar Michael Tanner notes that those claims may not be as far from reality as the bill's defenders would like the public to think. President Obama's recent nomination of Donald Berwick to direct the Center for Medicare and Medicaid Services (the office that oversees government healthcare programs), seems to substantiate the claims of upcoming rationing of healthcare services. Tanner explains how Berwick’s infatuation with the British healthcare system, and its rationing mechanism, could lead to some interesting – and scary – developments stateside.
When Will Europe Collapse?
In a new Cato Institute paper, Václav Klaus, president of the Czech Republic, examines the eurozone's contribution to slowed economic growth in Europe and predicts the costs of maintaining the European monetary union. The creation of the eurozone was presented as an economic benefit to all the countries willing to give up their own currencies. Studies promised that the euro would accelerate economic growth and reduce inflation. Also, the studies stressed that the member states of the eurozone would be protected against all kinds of unfavorable economic disruptions and exogenous shocks. It is clear that nothing of that sort has happened.
Conspiracy Theories Undermine Liberty
Conspiracy theories are ubiquitous these days, and they range from beliefs on the far left and the far right. However, believing such stories ultimately undermines the principles we hold as classical liberals, says Steven Horwitz, a St. Lawrence University economics professor. He notes that "Our case for freedom must ultimately rest on reason and logic, and we must be open to evidence that genuinely contradicts our understanding of the world."
But besides the logical challenge of classical liberals (or anyone, for that matter) holding conspiracy theory beliefs, such ideas undermine the effectiveness of free markets. "When we fall into conspiracy thinking we are actually accepting the fundamental premise at the heart of every form of socialism: that it is possible for human beings to consciously control the economy or society more generally," says Horwitz. This is not the slippery slope we want to be on.
The Greecing of America, Simplified
Greece is imploding. Under its high burden of public debt, deficit spending (i.e. borrowing), pensions plans and low economic output, the Greek economy can no longer stay financially afloat. Unfortunately, the U.S. resembles Greece a lot more than many Washington politicians would like us to think.
What's Wrong About Insider Trading?
Cato scholar Doug Bandow raises some questions about the federal laws restricting and punishing insider trading, and calls it “a genuinely stupid thing to do.” Besides the fact that insider trading is the use of the most current information (typically a good thing in market economics), Bandow explains that "The law bizarrely affects only one-half of the trading equation." Only those who act on the information get punished, but those who intentionally do not act receive no oversight.
Despite the incalculable number of insider "non-traders," there is no evidence that they impair the market; why would insider trading be any different? This calls into question the whole concept of sanctions against insider trading, suggesting it may be less about market efficiency and more about artificial fairness by restricting action based on the most current information. (Although, Bandow questions the “fairness” of restricting one person simply for being related to a company exec but not restricting another for using 30 years of intuition and experience.)
17 Things to Despise about Government Regulation
At a time when the government is considering more regulation of private business - in the energy, financial, and healthcare industries, it is important to look a little deeper into what that may mean for average Americans. The Foundation for Economic Education, in a couple of articles in their Freeman publication, do just that.
- Richard Fulmer and Robert Bradley lay out fifteen problems with government regulation, saying "Any time government regulators try to do much more than lay out the basic rules of the game, unintended consequences and moral hazards rear their ugly heads."
- In an article on the financial crisis, Peter Lewin, professor at the University of Texas at Dallas, unveils two faulty assumptions of government involvement: 1) the cause of "market" failure, and 2) the nature of regulation itself.
At a time when "regulation" is a term filling many top headlines, it would serve us well to consider time tested lessons, and not repeat the same mistakes.
Deficits, Debts and Unfunded Liabilities: The Consequences of Excessive Government Spending
Huge budget deficits and record levels of national debt are getting a lot of attention, but this video, narrated by former Cato intern Kelly McDonough, explains that unfunded liabilities for entitlement programs are Americas real red-ink challenge. More important, this Center for Freedom and Prosperity mini-documentary reveals that deficits and debt are symptoms of the real problem of an excessive burden of government spending.
How Bankrupt is America?
This video by www.BankruptingAmerica.org, via Reason, explains how much America owes, and also explains a way out of all the debt... Watch the two minute video for the answers.
Offshore Drilling, Still Worth the Risk
Reason science correspondent Ronald Bailey discusses the BP oil spill currently impacting the southern coast of the U.S. and presents a cost/benefit analysis to determine if the U.S. should pursue additional off-shore oil drilling. He warns that many, on both sides of the issue, blow this type of event out of proportion, saying "in deciding whether or not to continue offshore exploration for oil and gas, a calm quantitative approach makes more sense.” In a preliminary analysis of research studies, Bailey finds that opening additional off-shore drilling options, could amount to $323-$967 billion of total benefit, adjusting for both price fluctuations and environmental risk. “Progress is a trial and error process, and increasing safety results from learning how to make better trade-offs over time between risks.”
U.S. Needs to Let More Workers In
Immigration reform is a hot topic in today’s political climate, but Dan Griswold, the director of Cato’s Center for Trade Policy Studies, claims that this issue doesn’t have to fall on party lines; the existing evidence demonstrates that true reform could lead to gains on all sides. Griswold notes that as Americans’ standard of living increases, low-skilled jobs become less desirable and higher-skilled jobs more available; however, our current immigration system “offers no means for a sufficient number of foreign-born workers to enter the country legally and fill that gap. So they enter illegally.” To produce a win-win for immigrants and Americans alike, a robust temporary-worker program should be adopted. This would provide an economic boost and save millions of the tax dollars currently going to costly border protection.
Hidden Cost of IRS Compliance: $338 Billion
The tax system is a complicated nightmare that forces taxpayers to devote ever-larger amounts of time, money, energy, and other resources in hopes of complying with the internal revenue code and avoiding IRS persecution. This CF&P Foundation video shows that this corrupt mess is the result of 97 years of social engineering and industrial policy that began almost immediately after that dark day in 1913 that the income tax was created.
VAT Attack!
Politicians have begun to more frequently toss around the concept of a VAT, or value added tax. A VAT attempts to spread the cost of the tax across the production chain, resulting in a cumulative amount close to that of a national sales tax. Cato tax scholar Dan Mitchell comments that while a VAT has some virtue, the biggest problem with the proposed policies is that they do not attempt to replace current taxes with a VAT, they simply aim to add it. The deeper problem is that politicians will likely use the additional revenue not to reduce the burden on citizens, but will allocate it to special interests in order to buy votes and stay in office. Mitchell notes, “real-world evidence shows that VATs are strongly linked with both higher overall tax burdens and more government spending.” If the goal is to simplify government and eliminate waste, a VAT is definitely not the way to go.
21: Is It Time to Lower the Drinking Age?
Today, we all take the drinking age for granted, but should we? In fact, the US is one of only four countries in the world with a drinking age as high as 21—the other three are Indonesia, Mongolia, and Palau. Is the policy working to reduce health and safety issues related to youthful alcohol abuse? What are the unintended consequences of alcohol prohibition for 18-20 year olds? Reason.tv went to the University of Wisconsin-Stout in Menomonie, Wisconsin to get a first-hand look at the war on underage drinking.
Trade Deficit with China Not a Bad Thing
The Chinese currency – pegged artificially low against the U.S. dollar – has long been a topic of political debate, and with the current economic crisis some are claiming that the ensuing trade deficit hurts American jobs. Cato scholar Dan Ikenson dispels that myth by explaining how in the globalized economy the U.S. actually benefits from undervalued Chinese currency. He adds that “forcing China to appreciate its currency through sanctions will impose higher prices on American consumers, thereby reducing Americans' real incomes." The current situation allows Americans to benefit twice: once when purchasing inputs for production in the U.S., and again when purchasing final consumer goods from China. Our politicians should be aware that acting on impulse and not fact is setting us up for even harder economic times.
Disastrous Economic Fallacies - Terror as Stimulus?
Do natural disasters, earthquakes, or wars stimulate an economy and create growth? Did World War II get the US out of the Great Depression? Frederic Bastiat explained why such thinking is fallacious.
The Value of Profits
Are profits in a free market a sign of greedy businessmen stealing from their customers and hoarding wealth at the expense of ordinary people? Or are they, along with losses and the relative high or low prices commanded by different goods & services, actually a crucial part of a functioning and growing economy?
Find out about that and about how special favors from government can destroy the information provided by profits & losses in this video written & produced by Sean W. Malone with CitizenA Multimedia productions.
Deficit Timebomb?
Cato scholar Dan Mitchell co-hosts on CNBC to discuss Congress' move toward a second stimulus bill aimed at "creating jobs." Mitchell, along with Josh Barro of the Manhattan Institute, Michael Linden from Center for American Progress and CNBC's Simon Hobbs debate the need for more stimulus.
Price Controls Won't Help Healthcare
As President Obama resurrects healthcare reform, up from its grave in Massachusetts, his actions serve as a highlight real of his previous missteps on the subject. Cato scholar Michael Tanner offers several real world predictions of what might happen should Obama's policy actually pass the increasingly hesitant Congress. Tanner reminds that every action has a reaction, and that price controls set by government regulation will have unwanted effects. Furthermore, he notes that "limiting the prices that insurers can charge does nothing about the underlying costs of health care." Without substantative changes, Americans will end up with higher costs, less service and/or more debt. Thankfully, Tanner offers several recommendations for real reform.
Restrict Commerce Department to Boost Economy
Cato scholars Tad DeHaven and Chris Edwards comment on how to boost economic growth by scaling back the Commerce Department. They note that the Department serves several Constitutional functions, but discuss how its reach has progressively expanded to include many subsidy and regulatory programs. In fact, they note, "That sort of mission creep has occurred across the government and is one reason why the federal budget is drowning in red ink." Additionally, "By intervening in business affairs, the government often harms average families while rewarding inefficient businesses and highly paid lobbyists."
Hurtling Down the Road to Serfdom
In an article applying Hayek to our modern world, John Stossel asks, "Do we want a culture of takers or makers?" He presents the case that the "welfare state kills the creative spirit," and "changes the psychology of society" to become dependent on government provisioning. If that continues, Stossel warns, we may be in for a poorer society, high unemployment, stagnation, and complacency. If America is to continue to provide the means for higher standards of living for hundreds of millions of people - as it has for many decades - it must change its course and take the road less traveled by, the road of limited government and free markets.
Why the Slow Recovery?
In light of many current headlines on higher taxes, deficit spending and waning consumer confidence, Cato's David Boaz reflects on why the economy has been so slow to recover. This is the slowest and weakest post-war recovery on record, due much to bad government policies. Despite their record of failings, Boaz appeals to a rectifying course of action; "Let’s hope the Obama administration soon learns that higher taxes, more regulation, a larger share of GDP shifted to government, fears of Fed monetization of soaring debt... can only discourage employers, investors, and entrepreneurs."
Economics 101: School Choice Example Shows Why Government Monopolies Are Bad
Competition promotes innovation and results in higher quality and lower costs. Government-run schools are a tragic example, by contrast, of why monopolies generate bad results. This video uses the example of school choice to explain why competition is a better approach. www.freedomandprosperity.org
Big Government's Cronies
When government officials and businesses get buddy-buddy on some sort of initiative, it usually behooves a concerned citizen to take a closer look. John Stossel does just that in his look at the Obama administration's connection with Serious Materials, a window manufacturer. Stossel outlines the story of the two parties' relationship, and at one point explains how they literally get in bed with each other, as the official in charge of allocating government stimulus dollars (tax payers' money) is married to one of Serious Materials' vice presidents. Sound funny to you? Stossel thinks so. Check out his article, and also his recent television show describing this same phenomenon, which he refers to as ”Crony Capitalism.”
Our "So-Called" Leader
David Harsanyi, of Reason, comments that as people reflect on the past decade the consensus is that it was a bad one. Fifty percent of Americans think so, including President Obama. During his State of the Union address he said, "We can't afford another so-called economic 'expansion' like the one from the last decade—what some call the 'lost decade.'" However, writes Harsanyi, the past decade brought major advances in many key areas of American life, including life expectancy, health treatments, GDP, education and others. So why is Obama lambasting the very things that brought us prosperity? That's not clear. But what is clear is that, "As always, the state of the union will be just fine—if only our so-called leaders in Washington would let it be."
The Audacity of Posturing
In President Obama's most recent weekly radio address, he decried the Supreme Court's decision to unrestrict free speech and listed various things that he has done in the past year to "clean up" special interest groups in politics. However, it seems his words are just rhetoric. Tim Carney, columnist at the Washington Examiner, explains that "the image of Obama as a reformer is at odds with his behavior as president." Obama has signed bills that benefit big businesses, given handouts to big unions that supported his campaign, and brought multiple lobbyists into his administration. Carney advises that, “we should interpret Obama's teeth gnashing over the court ruling the same way we should take his scolding of Wall Street: as nothing more than political posturing.”
"Fear the Boom and Bust" (Hayek v. Keynes)
George Mason University economics professor Russ Roberts and John Papola have finished producing an economics hip-hop rap video. The video contrasts the theories of John Maynard Keynes and Friedrich A. Hayek, two of the most famous and yet divergent economic minds of the 20th century.
Economy Gets Smaller as Government Grows
Cato scholar and chairman of the Institute for Global Economic Growth Richard Rahn tackles the claim that the government has created jobs. Using several examples, Rahn demonstrates that simply putting one person to work in the government bureaucracy by taxing many others doesn't create a job, but keeps it from being created in the private sector. "History has shown time and time again that when the government sector gets bigger, economic growth slows, there is less job creation, and people become relatively poorer." Rahn says that this isn't a matter of partisan politics, but is a mathematic reality.
Tale of Debt: An American Story
Trying to understand how the U.S. government works is a complicated task. This brief video by The Heritage Foundation makes understanding the debt limit a bit easier by presenting a clearly worded narrative that lays out the problems the U.S. is facing in an engaging allegory.
Video: Deficits Aren't Bad, Gov't Spending Is
Deficit spending has become a common term in U.S. political conversation, and is cause for much focus as the U.S. holds more and more debt. Dan Mitchell, in a new Center for Freedom and Prosperity video, however, argues that the deficit spending in itself is not necessarily a bad thing. With a historical and investment perspective, Mitchell explains that debt can be a useful tool if it allows for long term benefits. The problem is that government – which is hardly a role model of financial prudence – has demonstrated a tendency to spend enormous amounts on political rather than economic investments. With the ability to tax and inflate its way along, the government isn’t worried, but we the people should be.
Unemployment Continues to Rise Despite Stimulus Spending
While the government has spent over 32% of the stimulus so far, unemployment remains 11% higher than the Obama administration's projections of the worst case scenario. Mercatus Center budget scholar Veronique de Rugy provides an update on stimulus spending and unemployment. The Obama administration projected that unemployment would peak at 8.8% without a stimulus package; unemployment figures have been at 10% or greater for the past three months. De Rugy's work comes at a time when some are considering a second stimulus. To that she says, "It seems clear that for the sake of taxpayers and for the sake of job creation, a second stimulus is absolutely the wrong idea." Her Working Paper, entitled 'Stimulus Facts,' is available here.
Government: a Transfer Machine
John Stossel, writing for the Foundation for Economic Education, discusses George Bernard Shaw's quotation, “The government who robs Peter to pay Paul can always depend on the support of Paul,” in regards to the current economic and political environment in the U.S. Approximately half of the households in America will pay income taxes this year, while the other half will pay zero or even receive money. This results in a problem, namely, "a growing number of people don’t pay but get benefits from those who do," says Stossel. If the balance tips and more people receive money than pay taxes, what will happen to the growth and standard of living in America? Since a rapid response in needed, and tax reform calls for much debate on possible alternatives, Stossel champions a first step: reduce government spending.
The 'Decade from Hell'? Not Quite.
Sure, the past decade has brought some interesting challenges into the lives of Americans everywhere, but that doesn't mean the good hasn't outweighed the bad, says Cato vice president Gene Healy. Compared to the misery of several past decades in U.S. history – including phenomena such as unemployment, 70 percent tax rates, gas lines, and inflation – the 00's have provided net gains to the American public. The Internet alone has extensively contributed to better quality of life, greater efficiency in work, and supported the exercise of the First Amendment. Healy notes that history runs in cycles, and that the hard times of the 60's and 70's ended when "Americans corrected their course," adding that "the years to come will give us plenty of incentive to put America on the right path again."
Meddling Policies Responsible for Stalling Recovery
Mark Calabria, Cato's Director of Financial Regulation Studies, discusses the underlying reasons for the prolonged recession. He notes that while President Obama inherited the recession, he is definitely making it worse. Calabria indicates that the current Administration's policies are what is keeping the economy from recovering. "Until employers and investors feel it is safe once again to put their businesses and investments at risk, and Washington ends its war on the productive elements of our society, we will not have significant private sector job growth."
Copenhagen: Let the Games Begin!
Cato environmental scholar Pat Michaels comments on the various antics and rivalries already evident at the climate conference that kicked off this week in Copenhagen. Poorer countries, like India, are making demands that the richer nations subsidize them to achieve the costly goals of emission restrictions. Obama, who thinks such subsidies are a good idea, is being reminded by Democratic congressmen that the power to commit to new regulations is not a constitutional role of the executive branch. And politicians, who are sticking voters with the bill for their partisan efforts, will face angry voters in the upcoming 2010 mid-term election. Of the conference, Michaels says, “Expect a lot of heat, not much light, and a punt right into our next election.”
Obama Proposes New "Stimulus"
President Obama on Tuesday outlined new initiatives focused on new jobs, infrastructure investment, and green development. The president did not announce the cost of these new proposals. Cato scholar Chris Edwards argues, "When it comes to jobs, the Obama administration needs to take off its ideological blinders and consider that its massive deficit spending is enslaving the next generation while doing nothing for economic growth. " Adds Mark Calabria, "[Obama's] proposals are an extension of the flawed ideas that did not work in the stimulus. They are just as unlikely to be effective now."
Government: a Gang of Thieves
John Stossel echoes Frédéric Bastiat when he says that the worst part of government is not what is seen but what goes unseen. Namely, even worse than tax increases collected to pay for budget deficits is the government spending that caused and continues to cause such deficits. The public notices when more money is taken from them but they rarely see how much the government actually spends. Stossel says he hopes Americans are ready for a tax revolt, but he doesn't think that will happen until the public begins to see the government elite as "a gang of arrogant bullies that has the audacity to believe that they know how to direct our lives better than we do."
Government Stimulus Caused Unemployment
"Why did the unemployment rate rise so rapidly... to 10.2 percent in October?" asks Cato fellow Alan Reynolds. "It was clearly the administration's 'stimulus' bill." Reynolds explains that the stimulus gave more money to states to fund unemployment benefits, which gave people the incentive to continue receiving government checks and not find work. In fact, top White House economist Larry Summers wrote a paper in 1995 that stated, "Unemployment insurance lengthens unemployment spells." So why would he enact the stimulus when he knew what would happen? Now that's a question worth exploring.
What is the House thinking?
John Stossel, former 20/20 news anchor and Fox News contributor, writes that he is embarrassed by the number of U.S. House members who support the current healthcare bill. "The notion that a small group of politicians can know enough to design something so complex and so personal is astounding," says Stossel. No matter how intelligent, top-down decision makers are no match for the discovery process of the market, which was described by F. A. Hayek. Government strong-arming cannot overcome the laws of supply and demand. The embarrassing part is that House members shouldn't need more than a Freshman course in economics to figure that out.
Following China on Education... Bad Idea
Cato education scholar Neal McCluskey compares Obama's education objectives with that of China, where the number of college graduates has been dramatically increasing. Obama has stated a commitment to churn out more college graduates, and he has dedicated the funds to do so. But, McCluskey notes, there are problems when simply increasing the number of graduates. One issue will be, as it already is in China, “(not) nearly enough jobs to employ all the newly credentialed.” If America doesn’t change course, Obama’s investments in education will largely be a waste.
Feds Giveth Jobs & Cars, Then Taketh Away
Cato scholar Tad DeHaven discusses the announcement that both 'jobs created' and 'economic growth' figures have been overestimated, and explains how such policies are actually limiting economic growth. Analysis shows that government has redirected employment, making jobs by taking them from elsewhere. And Cash for Clunkers simply caused people to buy cars a little sooner than they would have otherwise, causing reduced sales in the months to come. DeHaven concludes that the government policies are stifling growth due to a high degree of uncertainty among entrepreneurs and business owners; "Right now businesses and entrepreneurs are hesitant to make investments or add new workers because they're worried about what Washington's interventions could mean for their bottom lines."
Economics Rap: 10 Principles of Economics
Economics has long been considered practically a foreign language to many students. This group, Rhythm, Rhyme, Results, however, presents 10 principles of economics is a creative and catchy way: by rapping. Ranging from opportunity cost to competition, from trade to marginal gains, the tune presents a fairly good lesson of Supply and Demand in just over 3 minutes.
What's Michael Moore Talking About?
In his article for reason, John Stossel questions the explicit assertion of Michael Moore's new movie. Capitalism, Moore tells us, is to blame for the world's problems. Stossel doubts that Moore even knows what the term "capitalism" refers to. After all, Stossel asks, "What does the free market have to do with businesses manipulating government and strong-arming Congress for bailouts?"
The Value Added Tax: A Hidden New Tax to Finance Much Bigger Government
Cato scholar Dan Mitchell presents a clear and pointed analysis of the Value Added Tax, currently being proposed to increase government revenue. Mitchell discusses how the VAT is a tax that will hamper the entire process of production, causing the consumer to pay the difference passed on by producers and allowing the government to bring in more money to spend. While the VAT may be better than the current IRS code, that doesn't make it a good idea. Historically, a VAT is associated with much higher tax levels in the countries where such a policy is in place. The VAT is founded in poor economic rationale, and imposing one will only exacerbate loop-holes and special interest lobbying already plaguing in Washington.
Health Care Reform: The Long-Term Perspective
Congressman Paul Ryan (R-WI) disagrees that the current healthcare bill is the only option. He discusses the major problems with the current proposals and presents his own proposal for reform. "We’re dangerously close to becoming a social welfare state similar to Europe. When society goes down that road, it loses sight of liberty and becomes more concerned with security — both economic and other forms. When a country becomes a social welfare state, its society stagnates. Standards of living go down. Creativity, innovation, achievement, production, risk — these wash away, leaving high unemployment. We don’t want to go down that path."
Keynes, his followers, still wrong
Cato scholar and Hoover Institute fellow Tibor Machan reflects on the re-emergence of John Maynard Keynes in current political discourse. Michan notes that while some of Keynes' theories have been recently cited, other ideas and his personal philosophy have evaded the public eye, mainly because they are fundamentally flawed.
"It seems that for Keynes the sole avenue for self-improvement is to go to governments and seek their coercive support. Among other things what he fails to notice, as did Burke and other statists, is that government is composed of people and all the people with the power (some) others bestow upon them (or they grab) are susceptible to all the foibles Keynes attributed to people in general."
Roughly, if people are flawed, why is giving government (made up of people) immense power and elite status to dictate whatever policies it sees fit a good idea? Machan responds, "Keynes was wrong back then, and his followers are wrong now in thinking that our salvation lies with government."
Policy Forum: Taking Control of Spiraling College Costs
"Rising at a faster rate than even health care costs, the price of college is skyrocketing."
The Cato Institute will host a policy forum on the topic of Spiraling College Costs, on October 6th. Cato education scholar Neal McCluskey personally extended an invitation to CatoOnCampus visitors for this event. Join us for this event that bears more heavily on students than anyone else.
And if you can't attend the event, watch it online here.
Financial System Needs Less Regulation
Cato scholar Mark Calabria discusses President Obama's approach to reforming the national financial system. He notes that while reform is much needed, the wrong kind of reform will lead to even greater trouble than has been experienced over the past year. About Obama's plans, Calabria says, "The President’s plan chooses convenient targets and protects entrenched interests, rather than address the true underlying causes of the crisis." He notes that not addressing the problems that instigated the bubble and burst in the first place is a grave error. "Without real reform — fixing Fannie and Freddie, scaling back the massive subsidies for leverage in our tax code, loose monetary policy – it will only be a matter of time before the next crisis hits."
The Effects Of Fiscal Stimulus: A Magical Analysis
NYU economist Mario Rizzo evaluates the results of the massive stimulus packages and bailouts passed early in the year. More than half a year later, he finds that they have had a negative result, at least by traditional measures. But not to fear, politicians these days don't seem to use "traditional" measures. Rizzo says of Obama's stimulus apologists, "They attribute to the stimulus the current state of affairs — but not anything regarding the current state of affairs, just anything that can be construed as better than something else that could have happened."
Is College a Scam?
In a short video, 20/20 Co-Anchor John Stossel analyzes the $75.1 billion industry of higher education and the statement by Pres. Obama that, “We expect all our children not just to graduate high school, but to graduate college and get a good-paying job.” He evaluates that claim by looking at data and interviewing students, professors, administrators and professionals. The figures of college success typically touted by public figures are based on skewed data, and it's probable that many of the people who make good money after college could have done just as well without it, and not been under all the debt.
What's at Stake When we Alter Trade Policy?
George Mason University professor Russ Roberts discusses the topic of trade on Capitol Hill. He addresses the historical basis for trade, surmising that the reason we no longer value trade so highly (and therefore impose trade restriction policies) is because we no longer rely on trade for our survival. He further provides an analysis of why trade policy is more volatile during a recession.
Federal Pay Outpaces Private Sector Pay
Cato scholar Chris Edwards contrasts workers paid by government and those compensated in the private sector. Using data from the Bureau of Economic Analysis, he finds that average pay is almost double what it is in the private sector, and more than double when considering benefits. There are various criticisms (addressed here), but Edwards notes that the most striking point is that this discrepancy has drastically increased over the past decade. He concludes that, "It’s time to put a stop to this. Federal wages should be frozen for a period of years, at least until the private-sector economy has recovered and average workers start seeing some wage gains of their own."
The Case Against College Entitlements
The cheaper something desirable becomes, the more people will buy it. What's true for a Snickers bar is true for education, according to Michael Moynihan, from Reason. He, sociologist Charles Murray, and Rep. Paul Ryan address this issue in a short video and article. They discuss the Obama Administration's covert moves to revamp and recharge government funding of college education. They also address the provocative question, "What if America is sending too many people to college?" If you think a kid with money in his pocket may be inclined to buy too many Snickers bars, you may agree with Moynihan's conclusion.
Seven Lessons of Cash-for-Clunkers' Failure
In the Washington Examiner, Irwin Stelzer discusses several reasons to reconsider the "success" of the cash-for-clunkers programs, which spent $3 billion of taxpayer dollars in just over a month. His final of seven points notes the negative impact on lower-income consumers; "By mandating the destruction of trade-ins, Congress removed 700,000 cars from the used-car market, inevitably driving up prices of the cars that lower-income consumers tend to buy." Stelzer's point transitions well into the up-coming debates on Cap-and-Trade that are sure to resurface come the end of the Senate's August recess. Yet another instance where environmental hype trumps human well-being.
Reason Foundation's 23rd Annual Report on Privatization and Outsourcing
The Reason Foundation has long been a proponent for liberty, and has just released its Annual Privatization Report. From public-to-private parking meters in Chicago to "contract cities" in Georgia, this report studies current U.S. trends. Leonard Gilroy, the editor of the report, comments that "Interest in privatization is sky-high and rightly so. Now more than ever, policymakers need to study their priorities, re-examine what are really core government functions, and then tap the private sector's expertise in all of the areas where they can save taxpayer money and improve the quality of services."
Obama vs. Mathematics
Cato Scholar Jagadeesh Gokhale and Warton School professor Kent Smetter write in a National Review article addressing President Obama's apparent challenge to the mathematical realities of his health-care plan. They cite that "The House plan has a present-value shortfall of $13.6 trillion," following with an analysis that "Shoring up these programs — another Obama campaign promise — would require collecting 328 percent more tax revenue from the rich." They conclude that such a policy shift would come at the cost of the American economy.
Cato Reading Lists, by Research Topic
The Cato Institute has just published a reading list of books and articles that form the basis for libertarian thought. The list has been expertly organized and is divided by research topic. If you have been looking for a stronger foundation of the principles of liberty, this is for you!
Americans Want to Have their Cake and Eat it Too
What do cake, jugglers and frogs have in common with the American economy? John Stossel thinks quite a bit, as he links to a Barron's editorial. The article explains that "The party in power believes that Americans can eat their cake and have it, too, just as the other party did when it was in power. (The cake party is always in power.)"
Tragedy of Growing Government: More Lobbying, Less Productivity
David Boaz discusses that as government gains more control, more businesses will dedicate their resources to seeking special treatment (just like Hayek said in 1944!). The downside to that transfer is that "businesses will devote their time, money, and brainpower to influencing decisions made in Washington rather than to developing better products and delivering them to consumers." And that results in losses for us all.
Does Inequality Still Matter?
Cato scholar Will Wilkinson addresses why talk of income inequality has to a great degree disappeared from national discourse. He notes that there are many variables in evaluating income inequality, and that economic crisis complicates the issue. However, he adds that silence on the topic is also due to "the corruption of a political system in which crises are used to pay off the governing party's allies."
Cato Ads in National Media
As with the Stimulus ad, the Cato Institute continues to draw attention to the true dimensions of governmental irresponsibility. Starting the last week of July, Cato is running ads on Obama's Healthcare proposal in national newspapers and on the radio. In addition, Cato has launched a new website (healthcare.cato.org) to inform the public of the need for reform - the right, free-market and responsible reform.
Is Your iPod Unpatriotic?
The guys at ReasonTV put together this article and visually appealing clip documenting 'Why America Shouldn't "Buy American."' They conclude with the analysis that "Even though plenty of foreigners have jobs thanks to it, so do 14,000 Americans whose duties include designing and marketing the little buggers. So the iPod is a product of America and the world, and these days that describes nearly all the items we buy."
Bailouts Could Hit $24 Trillion?!
"These promises could make the implosion of Fannie Mae and Freddie Mac look like a lemonade stand closing," said Cato Executive VP David Boaz. In this post he discusses an article by ABC News regarding the escalating cost of our nation's current 'bailout' mentality, and the potential price tag of such efforts.
Too Big to Fail, Read, Count, or Stop
Economists Adam Smith and Bruce Yandle write in Cato's Regulation magazine about the expanision of government in practically every market arena, and outline the implications of such a change. They warn that, "the ongoing entanglement between politics and the market means there will be much to fail, much to read, much to count, and little hope of stopping any of it."
Doing "Something" vs. Doing "Nothing"
ABC News' 20/20 Co-Anchor John Stossel counters Vice President Joe Biden's defense of the stimulus plan, and provides an insightful graph. Stossel condludes that doing something "may have created uncertainties that brought us results worse than they predicted doing "nothing" would achieve."
Three Cheers to Swiss Government for Resisting U.S. Fiscal Imperialism
Swiss bank accounts have been made famous by their anonymity, an issue with which the US courts have recently struck a dispute. Cato scholar Dan Mitchell describes a recent development in the situation. He explains that "the Swiss government has stepped in to ensure that the bank cannot be extorted."
Fuel Standards Are Killing GM
Cato scholar Alan Reynolds in The Wall Street Journal writes, in a compelling and timely manner, that "General Motors is likely to become profitable only if it is allowed to specialize in what it does best — namely, midsize and large sedans, sports cars, pickup trucks and SUVs. The company can't possibly afford to scrap billions of dollars of equipment used to produce its best vehicles simply to please politicians who would rather see GM start from scratch, wasting more taxpayer money on "retooling" to produce unwanted and unprofitable subcompacts and electric cars. The average mileage of GM's future cars won't matter if nobody buys them."
Wal-Mart Promoting Universal Health-Care..?
Reason Magazine editor Peter Suderman discusses Wal-Mart and health care, stating "Now you can add another corporate behemoth to the list of supporters of advocating more government involvement in health care: Wal-Mart... Why would Wal-Mart do this? In part, because it's a good PR move... it's also a good from a competitive standpoint."
Billy Mays, Free Market Hero
ABC's 20/20 Co-Anchor John Stossel adds an interesting perspective to the life work of Billy Mays, made famous by his ability to sell things people "hadn’t known they'd wanted," who died earlier this week. Stossel states that "Mays was more of a “public servant” than the regulators who claim to serve us."
King George III: Obama-esque?
Cato scholar David Boaz succinctly lists many examples of the current administration's tendency toward excessive and business-retarding tax policies. He contrasts the opressive attack on American's back pockets with the historical declaration announced by our nation's founders 233 years ago, quoting the Declaration: "He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance." Strangely familiar? You decide.
Global Warming Debate Heating Up
Forecasting scholars Dr. Kesten C. Green and Dr. J. Scott Armstrong take on MIT's recent Global Warming report: "Policymakers and the public should be made aware that the forecasts from the MIT modellers, as well as those used by the [Intergovernmental Panel on Climate Change], are merely the opinions of some scientists and computer modellers. ...The forecasting procedures were not valid and there is no reason for policymakers to take their forecasts seriously."
Globalization = Good
Professor Donald J. Boudreaux discusses trade policy through the impirical demonstration of gains from globalization. "Those who doubt the strength of the theoretical case for free trade should also consider that the empirical evidence in its favour is overwhelming. There is simply no credible evidence to support the belief that restricting trade increases the prosperity of ordinary citizens. All of the evidence points towards the benefits of free trade."
Audit the Fed
Republican Congressman and two time presidential candidate Ron Paul wants to audit the Federal Reserve. Arguing that Americans need to know more about the central bank, especially given the drastic increases in the size of the bank's balance sheet.
At Least Some Are Coming Around
By Daniel J. Mitchell: "The class-warfare crowd in Washington wants bigger government and higher tax rates, so it’s a bit shocking to see that a group of Northeastern Democrats are slashing tax rates. Yet that is exactly what Maine’s politicians are doing. The Governor even makes the common-sense observation (that so far has escaped President Obama’s attention) that there won’t be any jobs without investors and entrepreneurs."
Washington: Too Big To Succeed
By Lawrence W. Reed: "Certain private firms are widely believed to be “too big to fail.” So we’re in the process of handing big chunks of them over to the government. Companies that lose billions are being told what to do by an outfit that loses trillions. The question we all should be asking ourselves is this: Are we trusting our economy and our lives to a government that is too big to succeed?"
No, Really, It's Not Government-Run!
By Michael D. Tanner: "If a "co-op" is run by the federal government under rules imposed by the federal government with funding provided by the federal government, it's simply government-run health insurance by another name. Opponents of a government takeover of the health care system should not be fooled."
Baffled By the Economy? Don't Listen to Economists
By Steve Chapman: "Macroeconomists are expected to be smart, learned and articulate in explaining and predicting the course of the economy. But these days, at least, no one really expects them to be right."
Have We Got a Deal for You
By George F. Will: "'What we are not doing -- what I have no interest in doing -- is running GM,' says the president who, when not firing GM's CEO, purging its board of directors and picking new members, is designing new products (imposing fuel economy requirements that will control size, weight, passenger capacity and safety). The president, overcoming his professed reluctance to run GM, resembles the journalist Don Marquis when, after a month on the wagon, he ordered a double martini and exclaimed: 'I've conquered my goddam willpower.'"
100 Useful Research Tools for Amateur Economists
"You don’t have to be a professional economist to do some really great research on the web. Whether you’re looking into historical trends, modern buying patterns or the latest stats on the global financial market you won’t find any shortage of information to keep you interested. Here are 100 great resources to utilize that can help you find, organize and understand your economic research."
Sachs Ironies: Why Critics are Better for Foreign Aid than Apologists
By William Easterly: "Official foreign aid agencies delivering aid to Africa are used to operating with nobody holding them accountable for aid dollars actually reaching poor people. Now that establishment is running scared with the emergence of independent African voices critical of aid, such as that of Dambisa Moyo."
Nostalgianomics: Liberal economists pine for days no liberal should want to revisit.
By Brink Lindsey: "The rise in income inequality does raise issues of legitimate public concern. And reasonable people disagree hotly about what ought to be done to ensure that our prosperity is widely shared. But the caricature of postwar history put forward by Krugman and other purveyors of nostalgianomics won’t lead us anywhere. Reactionary fantasies never do. "
Globalisation is Good - Johan Norberg on Globalization
The world is an unequal and unjust place, in which some are born into wealth and some into hunger and misery. To explore why, in this controversial Channel Four documentary the young Swedish writer [and senior fellow at Cato] Johan Norberg takes the viewers on a journey to Taiwan, Vietnam, Kenya and Brussels to see the impact of globalisation, and the consequences of its absence. It makes the case that the problem in the world is not too much capitalism, globalisation and multinationals, but too little.
Do Economists Believe American Democracy Is Working?
William L. Davis and Bob Figgins write, "Economics it is said, presumes that status-quo policy has some sense behind it, that it emerges from a political process that works. Has conomics come to a status-quo orientation from a widespread attitude that the political process works?"
The Dictator’s Handbook
By Paul Collier: "Why is democracy failing even as elections proliferate? A thought experiment sheds new light on why aging autocrats remain so hard to dislodge."
Hedge Fund Manager Strikes Back at Obama
"Clifford S. Asness is not afraid to defend himself against attacks from the Obama administration. The outspoken managing partner of AQR Capital Management, a $20 billion hedge fund in Greenwich, Conn., has written a scathing letter striking back at President Obama for his harsh words blaming hedge funds for Chrysler’s bankruptcy."
Cato Conference: Lessons from the New Deal and Great Depression
With the economy in a deep recession and policymakers turning to massive government intervention in an attempt to create jobs and bolster the financial system—it feels like the 1930s all over again. Today’s new New Deal is rapidly unfolding, with the Obama administration and many lawmakers making it clear that any question of the success of FDR’s New Deal policies was resolved long ago: government intervention worked, and history bears repeating. Join us at the Cato Institute on June 1 to be a part of a highly informative half-day conference. Recognized national experts will discuss the economic and legal impact of the New Deal, and how its legacy is being used and misused to shape policy responses to current economic hardships.
Don't Turn America Into Another France
Veronique de Rugy of the Mercatus Center (and formerly with Cato) narrates a new video warning that it would be a mistake to turn America into a European-style welfare state, which is the fate of her native country.
Alex Tabarrok: How ideas trump economic crises -- a surprising lesson from 1929
"The 'dismal science' truly shines in this optimistic talk, as economist Alex Tabarrok argues free trade and globalization are shaping our once-divided world into a community of idea-sharing more healthy, happy and prosperous than anyone's predictions."
February Op-Ed of the Month
Congratulations to Samuel Sharp for winning the February Cato on Campus Op-Ed of the Month! Arguing against protectionist policies, Samuel highlights the increased costs and economic harms that result when governments interfere in free trade.
Return of the Living Dead: What the U.S. Can Learn From Japan's Failed Experiment With "Zombie Businesses"
By Anthony Randazzo: "Killing zombies isn't typically the responsibility of America's president or treasury secretary. But if the country is going to get through the current financial crisis, President-elect Barack Obama and his economic team better get out their shotguns and aim for the head."
Ask the Expert: Dan Griswold on Work Visas
Dan Griswold, Director of the Center for Trade Policy Studies at Cato, argues that the current H1-B work visa policy hinders economic growth and scolds U.S. companies "for seeking the human capital they need abroad while at the same time denying them the ability to expand their skilled workforce at home."
Free Trade Petition
"In cooperation with the International Policy Network and a worldwide group of think tanks, we are circulating this petition to combat recent moves toward harmful economic nationalism. I urge you to sign it [and to encourage your professors to sign!]. It is not yet a public effort, but please do share it with your colleagues, friends, and professional contacts. The first unveiling of this petition will be April 1st before the G20 meetings in London. It is a part of a much broader campaign that will be mobilized around the world to alert the public to the dangers of attempts to block trade and to revive positive efforts toward increasing freedom of trade. We will have a series of videos on the benefits of trade, booklets, public events, and much more, available in a multitude of languages." - Dr. Tom G. Palmer
Jeffrey Miron on the Stimulus
A friend of the Cato Institute, Professor Jeffrey Miron, writes that "Bailout 2.0, like its previous incarnation, is a dangerous gamble for the Treasury and the economy."
Keep the Banks Private
Donald Boudreaux, an advisor for Cato's Center for Trade Policy Studies, argues that "When government takes over, political meddling is sure to follow."
The Innovation Squelch: Obamanomics is bad news for American entrepreneurs.
By James Manzi: "Like the college students who stayed up late to hear Obama’s campaign speeches only to find his first significant action to be a stimulus program that will transfer about $1 trillion from them to the Baby Boomers, Silicon Valley Obama supporters may find themselves in an uncomfortable environment. A government-dominated economic era may not be an auspicious one in which to start companies that threaten big, incumbent corporations with lots of political clout."
Taking the Name of Lord Keynes in Vain
By Mario J. Rizzo: "But if we are going to attempt to solve the problems of today by drawing inspiration from Keynes, then we should pay attention to his mature ideas rather than to the textbook versions of what he said, some of which reflect Keynes’s earlier thinking. When we do this we shall find that some of his policy proposals were quite different from today’s “Keynesian” wisdom. Other proposals were extraordinarily radical and far from what is being proposed by lawmakers on the political left or right today."
Cato on Campus Challenges the Stimulus
Cato on Campus is proud to bring Cato's message directly to your campus. Cato on Campus is publishing a full page ad in 15 of the U.S.'s most prestigious universities providing a statement, signed by 200 economists, that government intervention in the economy is not a means of producing economic growth. Check out this page to find updates on campus op-eds, letters-to-the-editor, and teach-ins related to the Cato ad and the stimulus package/Keynesian economics in general.
Ask the Expert: Tad DeHaven on Digging Ditches and the Stimulus
A common justification for the stimulus package is that government spending can counteract economic shortfalls. Tad DeHaven explains why this is a common mistake and that the jobs we see created by government stimulus does not encompass the lost jobs and investment that we don't see.
Naomi Klein: A Prebuttal
Who: Will Wilkinson Where: 1505 Seamans Center, University of Iowa Hosts: Co-sponsored by the Advocates of Liberty and U of I Department of Economics Description: Naomi Klein will be on campus giving a UI Lecture Committee speech in February where she will be talking about her book "Shock Doctrine: The Rise of Disaster Capitalism". This book attempts to tie Bush's corporatist big-business ecocomic policies, the Iraq War, and most other bad things to the free market ideas of Milton Friedman. Will Wilkinson will defend "neo-liberal" free markets, defend Friedman against Klein's scurrilous attacks, and reveal the many errors, factual and logical, in Klein's bestseller. In a lecture one night before Naomi Klein's appearance on campus, Wilkinson will give a talk co-sponsored by the Advocates of Liberty and the UI Department of Economics. Let the fun begin.
"Falling Behind: Explaining the Development Gap Between Latin America and the United States"
What: Book Forum Where: Cato Institute Description: Featuring the editor Francis Fukuyama, Professor of International Political Economy, School of Advanced International Studies, Johns Hopkins University; with comments by Norman Loayza, Lead Economist, Research Department, World Bank; moderated by Ian Vásquez, Director, Center for Global Liberty and Prosperity, Cato Institute
The Ad Is Running
Today, Tuesday, February 10, the Cato on Campus/Students For Liberty ad on the stimulus package is running in 14 of the 15 selected newspapers around the U.S. (Berkeley will be running on Thursday, February 12). Check it out in your school's paper!
Hundreds of Economists Sign on to Cato Institute Ad
There is plenty of disagreement on whether a big-government stimulus project is the best way to bring the United States out of recession. The Cato Institute purchased a full-page ad in major newspapers across the country listing the names of several hundred economists who object to massive deficit spending as an economic stimulus. Cato scholars and ad signatories have made their case on television since the spending program was proposed.
History Passing By Cornell?
Andrew Loewer, President of the College Libertarians at Cornell University, wrote this letter to the editor of the Cornell Daily Sun, arguing that the stimulus package presents an epochal moment in history that deserves more attention than the Cornell Daily Sun has given it.
Mr. President, We Disagree
President Obama says that "economists from across the political spectrum agree" on the need for massive government spending to stimulate the economy. In fact, many economists disagree. Hundreds of them, including Nobel laureates and other prominent scholars, have signed the statement that appears in the Cato Institute's newspaper ad.
Ask the Expert: Dan Mitchell on Keynesian Economics
Dan Mitchell explains why the current economic crisis is the result of government policy mistakes and why more government intervention will not end the crisis any sooner than the market.
The Road Ahead
The Obama administration comes into office with an overwhelming slate of challenges. From the economy to global warming, from the energy debate to US foreign policy, the new administration will have a host of important issues to deal with immediately after taking power. Check out this collection of studies, op-eds, podcasts, and publications by Cato's scholars on the policy decisions ahead.
Obama Stimulus Bears a Closer Look
By Will Wilkinson: "Last week in his big economic stimulus speech, President-elect Barack Obama promised less waste and a sunny new climate of transparency. Obama says, "We'll invest in what works." This week, we're asking, "So, what works?"
Exposing the Keynesian Fallacy: The Condensed Version from Cato-at-liberty
By Daniel J. Mitchell: "That mini-documentary discussed the theoretical shortcomings of Keynesianism and also reviewed the dismal results of real-world Keynesian episodes."
America Does Not Need More Czars
Will Wilkinson, a research fellow at the Cato Institute, writes that, "In tough times like these, America does not need a dose of tragic Russian authoritarianism."
Keynsian Economics is Wrong
Based on a theory known as Keynesianism, politicians are resuscitating the notion that more government spending can stimulate an economy. This mini-documentary produced by the Center for Freedom and Prosperity Foundation examines both theory and evidence and finds that allowing politicians to spend more money is not a recipe for better economic performance.
What is the DEA Smoking?
The U.S. government has recently argued that it is succeeding in the war on drugs because the price of drugs has risen, indicating a shortage of supply. However, Cato's vice president for defense and foreign policy studies, Ted Galen Carpenter points out, "The reality is that street prices for illegal drugs act like the famous observation about prices in the stock market: they will vary."
Bush and Obama Opt for Corporatism Over Freewheeling Capitalism
The auto industry just got its bailout. Cato's Executive Vice President, David Boaz, explains that with the recent bailouts, "the government is seeking to support existing businesses. That isn't laissez-faire. It isn't what free-market advocates support. But it is what Bush is doing and Obama wants to continue."
Obama's New New Deal
reason.tv has just released this new video on addressing the pressing likelihood that president-elect Obama will construct a new New Deal to address the U.S. economic woes. Michael Moynihan interviews UCLA economist Lee Ohanian, who argues that the New Deal's massive intervention into the economy actually prolonged the economic crisis by seven years.
Consequences of the Bailout
Richard W. Rahn, senior fellow at the Cato Institute, writes, "Many policymakers and politicians in Washington seem to be incapable of thinking through the consequences of many of their bad ideas. When a "bailout" is given to one firm, all of its competitors are put at a disadvantage."
Bankruptcy Doesn't Equal Death
Don Boudreaux, chairman of the George Mason University department of economics, writes, "A government bailout of the Big Three keeps huge amounts of productive inputs in firms that can't use them efficiently. Forcing taxpayers to subsidize the continued employment of gargantuan quantities of raw materials, labor and capital goods in unproductive pursuits is a recipe for economic stagnation. The popular and politically convenient myth has matters backwards: The bigger the unprofitable firm, the more vital it is that it be allowed to fail."
Ask the Expert: William Niskanen
William A. Niskanen, chairman emeritus of Cato, discusses the meaning of fiat currency and the relationship to the supply of money.
Cato Out Loud: The Auto Bailout
In a new edition of Cato Out Loud, Daniel J. Ikenson explains why the federal government should not extend a financial bailout to the auto industry. Since November, Cato analysts have appeared on more than 50 radio and television programs discussing the bailout of "The Big Three."
What Happened? Anatomies of the Financial Crisis
In this special issue of Cato Unbound, we’ve asked four respected economists, with four very different perspectives, to supply what they think are the missing pieces of the puzzle and to tell us how they all fit together.
Five Tips to Win Any Debate
By Justin Hartfield & M. Harrison: Don't Debate the Player, Debate the Claim. Five tips to verbally own your opponent with respect, grace and heavily veiled contempt.
Tax Havens: Myths vs. Facts
Politicians from high-tax nations routinely smear tax havens as part of their efforts to undermine tax competition. Using academic research and data from international organizations, this video shows that the most common attacks made against low-tax jurisdictions are empty demagoguery.
Cato's Annual Monetary Conference: LIVE
Listen live to Cato’s 26th Annual Monetary Conference will provide an in-depth treatment of the Lessons from the Subprime Crisis, which some view as the worst financial crisis since the Great Depression. Leading experts will discuss the underlying causes of the loss of confidence, particularly the policies that contributed to the subprime crisis and the reforms needed to avoid future turmoil in financial markets.
Say No to the Auto Bailout
By Daniel J. Mitchell: "A taxpayer bailout would be a terrible mistake. It would subsidize the shoddy management practices of the corporate bureaucrats at General Motors, Ford and Chrysler, and it would reward the intransigent union bosses who have made the UAW synonymous with inflexible and anti-competitive work rules."
Understanding the Financial Crisis
This video, created by AfricanLiberty.org, clarifies the basic causes and consequences of the current financial crisis.
When Corporations Hate Markets
In this month's lead essay, philosopher and libertarian theorist Roderick Long draws a sharp contrast between corporatism and libertarianism properly understood. He argues that liberals, conservatives, and even libertarians have all been guilty to some degree of obscuring this difference, and that the quality of our political discourse has suffered accordingly.
Is it Constitutional?
Richard Rahn, Senior Fellow at the Cato Institute, asks a question about the government's $700 billion bailout that few others are asking: Is it constitutional?
Voting Schmoting
"In this irreverent look at voting, economist Gordon Tullock explains why he believes you're better off avoiding the polls altogether on Election Day."
Changing Times
By Donald J. Boudreaux: "One lesson I draw from this frightening state of affairs is that even the most obvious falsehood stands a good chance of being widely believed if it is repeated often enough. The claim that the U.S. economy of late has been one of laissez faire has become a mantra. And it's now taken as fact."
The End of Jacob Weisberg
By Brink Lindsey: "We’ve just experienced a global disruption of financial markets on a scale not seen in seven decades. And we’re still in the middle of it: the ultimate extent, severity, and consequences of this crisis remain unknown. Yet Weisberg can already sum up the story in a single sentence: the libertarians did it!"
Robert Nozick Vs. The U.S. Congress
Cato Adjunct Scholar, Richard Epstein, provides a philosophical analysis of the effort by the U.S. Congress to increase home ownership in society in this Forbes article. Contrasting the pattern principle of justice held by Congress against Nozick's justice in acquisition, it is a great work that shows how philosophy is important to the real world.
Heroes of Capitalism
Heroes of Capitalism is a new blog that highlights a new capitalist every day and describes how they have made a difference in the world through capitalism. Recent heroes have included the inventor of a mousetrap, an Objectivist banker, and the inventor of cocoa powder.
Ask the Expert: Dan Mitchell
Cato Senior Fellow, Dan Mitchell, answers the question, "Which one of the proposed tax schemes from Senators McCain and Obama is better from a free market perspective and why?"
Suspend Cap Gains Tax on Toxic Assets
By William Shipman: "A simple change in tax laws could do more to resolve the current credit crisis than the massive bailout legislation that was just enacted or Sen. McCain's recent proposal that the federal government buy up all bad mortgages."
On Krugman's Nobel
Many are talking about Paul Krugman winning the Nobel Prize. Read up on Cato's commentary regarding the prize by Sallie James.
Regulators Cannot Avert Next Crisis
By Johan Norberg: "As usual after a financial crisis, we hear demands for new controls and regulations to stop it from happening again. But since every crisis has led to thousands of new pages of regulation, why is it that regulation doesn't stop crises from happening again?'
Cato Debates on Google
The Cato Institute is participating in a debate series hosted by a new interactive site, Google Knol. The debates on Knol are meant to offer a variety of in-depth opinions from experts, and afford visitors the opportunity to engage scholars on the ideas that are posted. Cato Senior Fellow Daniel J. Mitchell is debating the aftermath of the financial bailout bill with John Irons, research and policy director for the Economic Policy Institute. You can log into Google and offer suggestions, edits and comments to each side of the discussion. Mitchell and Irons will both field your comments and may even add them to their arguments.
An Open Letter to my Friends on the Left
By Steven Horwitz: "In the last week or two, I have heard frequently from you that the current financial mess has been caused by the failures of free markets and deregulation. I have heard from you that the lust after profits, any profits, that is central to free markets is at the core of our problems. And I have heard from you that only significant government intervention into financial markets can cure these problems, perhaps once and for all. I ask of you for the next few minutes to, in the words of Oliver Cromwell, consider that you may be mistaken."
Cato Scholars on the Financial Crisis and the Bailout
In this video Cato scholars explain the causes of the financial crises as well as the consequences of further government intervention.
Econ Professor Criticizes Bailout
Jeffrey A. Miron is senior lecturer in economics at Harvard University and was one of 166 academic economists who signed a letter to congressional leaders last week opposing the government bailout plan. He explains why in a CNN commentary.
Doing Something?
By John Berlau: "But what if the bailout, as originally proposed and in its latest incarnation, would spend $700 billion of taxpayers' money and actually make the economy worse? Believe it or not, there is good evidence this may happen."
Bailout Bill Fails
The proposed $700 billion bailout bill just failed in the House of Representatives. Cato Senior Fellow Jagadeesh Gokhale provides a full account.
Bailout Raises Libertarians' Market Value
By David Montgomery: "Instead, in their handsome building on Massachusetts Avenue, faced with a proposed $700 billion government bailout of Wall Street, this town's most gung-ho libertarians and free-marketeers are reaching for their coffee and their keyboards. They are invigorated. The prospect of doom and ruination for everything they hold dear only makes them stronger."
A Little Credit History. Or, Credit where Credit Is Due
By Jason Kuznicki: "The problem wasn't capitalism. It was simply this: Capitalism for thee, but not for me. The word of the day is corporatism, and since the days of the South Sea Company, we've never really been without it. Corporations have always used their power to try to win favors from the government, while leaving all the rest of us still subject to the vicissitudes of the market. That's the essence of corporatism."
Ask the Expert: Tom Palmer
Cato VP for International Programs Tom G. Palmer answers the first question in Cato on Campus's new Ask the Expert series, where you get to email in questions for Cato's scholars to answer. This edition's question takes on the issue of the relationship between government and economic development in impoverished nations.
The Ultimate Resource
In this lecture, the late (and certainly great)economist Julian Simon describes his concept of "the ultimate resource." An idea that Donald Boudreaux, chairman of the GMU economics department, considers "the most profound -- and least understood -- in all of the social sciences."
Organic Market
By Russ Roberts: "Both presidential candidates will promise a risk-free world with high returns. But peddling that fantasy is the cause of the current crisis. We treat our children this way--we do our best to insulate them from harm and still allow them to grow. I'd like politicians to treat me as an adult, paying the price for my recklessness and reaping a reward when I am prudent."
Ticking Time Bomb Explodes, Public is Shocked
By Robert Higgs: "The failure of Fannie Mae and Freddie Mac, setting in motion the biggest government bailout/takeover in U.S. history, brings a grim sense of fulfillment to competent economists. After all, what did people expect, that water would flow uphill forever?"
Tax Havens Are Very Beneficial for Global Economy
"Statist politicians and international bureaucracies such as the OECD and UN routinely attack tax havens, claiming that they lead to “harmful tax competition.” "Yet at no point do critics bother to provide any evidence for this claim. This mini-documentary that I narrated for the Center for Freedom and Prosperity looks at the empirical data and scholarly research and reports that tax havens actually have a very positive impact on the global economy." - Dr. Dan Mitchell
With Friends Like These, Who Needs Enemies?: Aiding the World’s Worst Dictators
Christopher J. Coyne and Matt E. Ryan: "Despite rhetoric supporting liberal values and institutions, the governments of developed countries provide continued development and military assistance to the world’s worst dictators. This aid sustains the status quo and imposes significant costs on ordinary citizens."
Three Days After Klein's Response, Another Attack
By Johan Norberg: "In May I wrote a critical Cato paper on Naomi Klein's attack on economic liberalisation, The Shock Doctrine: The Rise of Disaster Capitalism, which I claimed was hopelessly flawed on virtually every level. Now Naomi Klein has responded to some of my claims. This response is in itself an example of the methods Klein regularly uses in her works, what I have called disaster polemics."
Bailout Nation
By David Boaz: "But the bailout of Fannie Mae and Freddie Mac is another giant step toward government control of the economy. NPR reported this morning that the government takeover “could turn out to be a smart one.” Yes, if you think nationalization of the means of production just might work."
How Markets Use Knowledge
By Russ Roberts: "Economists will often say that prices steer knowledge and resources. Prices are traffic cops that signal to buyers and sellers what is scarce and what is valuable. But what does this mean exactly? How do prices achieve this?"
Creating Prosperity
By Donald J. Boudreaux: "No politician creates prosperity. It is created by countless entrepreneurs, businesses and workers competing and cooperating within markets. For government to avoid obstructing these markets is indeed desirable -- but it does not create the resulting prosperity. To insist otherwise would be no different from my insisting that I, as a driver who did not run over Ms. Jones as she walked back from the supermarket, am responsible for the tasty dinner she cooked that evening for her family."
Norberg on Open Trade
"Here's the eloquent, wise, and learned Johan Norberg -- speaking recently at the Cato Institute -- explaining some of the benefits of open markets." - Donald Boudreaux, Chairman of the Department of Economics at George Mason University
Poverty and Economy in Mugabe's Zimbabwe
A new, deeper poverty has gripped Zimbabwe and the formal economy has utterly been destroyed under the rein of Robert Mugabe. Rejoice Ngwenya, head of the Zimbabwean Coalition for Market and Liberal Solutions, discusses the realities of life in Mugabe’s Zimbabwe.
Keeping Our Cool: What to do About Global Warming
By Jim Manzi: "The loss of economic and technological development that would be required to eliminate literally all theorized climate change risk would cripple our ability to deal with virtually every other foreseeable and unforeseeable risk, not to mention our ability to lead productive and interesting lives in the meantime."
Economics Does Not Lie
By Guy Sorman: "If economics is finally a science, what, exactly, does it teach? With the help of Columbia University economist Pierre-André Chiappori, I have synthesized its findings into ten propositions. Almost all top economists—those who are recognized as such by their peers and who publish in the leading scientific journals—would endorse them (the exceptions are those like Joseph Stiglitz and Jeffrey Sachs, whose public pronouncements are more political than scientific)."
Swedish Myths and Realities
"Johan Norberg, author of In Defense of Global Capitalism, sits down with reason.tv's Michael C. Moynihan to sort out the myths of the Sweden's welfare state, health services, tax rates, and its status as the 'most successful society the world has ever known.'"
Bryan Caplan on Voter Irrationality
Bryan explains the Miracle of Aggregation, shows that its key assumption doesn't hold up empirically, then focuses on systematically biased beliefs about economics.
Greasing the World Economy Without Doha
By Daniel J. Ikenson: "The Doha trade round died a thousand deaths long before this week. But outside the bureaucracies in Geneva, Brussels and Washington, few are grieving because the world economy has moved on."
New on Free Will: Bruce Caldwell on Hayek
"This week, I talk with Bruce Caldwell, author of Hayek’s Challenge, a wonderfully lucid, comprehensive, and penetrating account of the development of Hayek’s economic and methodological ideas. Hayek is one of my enthusiasms, so I had a great time talking to Bruce, who knows as much about Hayek as anyone." - Will Wilkinson
Don't Shed a Tear Over Bid for Beer
By John D. Burger: "An unsolicited bid by the Belgian-Brazilian conglomerate InBev to take over Anheuser Busch has set off a backlash among the American public. Protesters of the proposed deal are relying on patriotic slogans such as "Keep Budweiser American" in an attempt to rally the masses against the originally friendly but increasingly hostile takeover bid. I find this reaction terribly embarrassing."
FARC Politics, FARConomics
By Ibsen Martinez: "Shortly after noon, on Wednesday, I finally sat down to write my monthly column when I received news that 15 hostages, including three U.S. defence contractors, held for years by the Revolutionary Armed Forces of Colombia, or FARC, the infamous drug-trafficking guerrilla, branded a terrorist organization by the United States and European Union, had been rescued by a successful army operation. Most eminent among the hostages was the 46-year-old former presidential candidate Ingrid Betancourt."
Munger on the Political Economy of Public Transportation
"Mike Munger and Russ Roberts deliver one of the best podcasts ever. Munger describes the way in which moving from a private bus system to a public system in Santiago Chile made essentially everyone in the city worse off. The puzzle that Roberts keeps pushing Munger to resolve is why the political incentives do not work to abolish the public system and revert to a private system." - Bryan Caplan
Tyler Cowen on Bloggingheads.tv
"The chat covers many topics, including whether capitalism will triumph, whether you should have more kids, and which country is most likely to be hit by the next nuclear weapon attack."
Mexicans and Machines: Why It's Time To Lay Off NAFTA
"Like technology, trade gives us more good stuff than bad—yet Americans are likely to cheer technology and fear trade. No doubt TV talkers and White House wannabes will keep stoking our fears of foreigners until voters and viewers stop buying it—or until robots snag their jobs, too."
From Breadbasket to Basket Case
By Mary Anastasia O'Grady: "As the presidential campaign drones on, Barack Obama and the Democrats are fleshing out the promise of "change" with some specific, big-government policy proposals. Many are familiar, perhaps because they already have been tried – in Argentina."
The Klein Doctrine: The Rise of Disaster Polemics
By Johan Norberg: "To make her case, Klein exaggerates the free-market reforms that take place in times of crisis, often by ignoring central events and rewriting chronologies. She uses loose metaphors and wild distortions to claim that free markets are a form of violence. She confuses libertarianism with corporatism and neoconservatism and blames Milton Friedman for encouraging reform by stealth. To do so, she engages in one of the most malevolent distortions of a thinker that has been done in a major work in recent years."
In Defense of "Sweatshops"
Benjamin Powell: "Because sweatshops are better than the available alternatives, any reforms aimed at improving the lives of workers in sweatshops must not jeopardize the jobs that they already have."
Kidneys for Sale: Iranian Organ Donation
By Kerry Howley: "'What can Iran teach us about good governance?' is not a question often posed in Washington. But according to Benjamin Hippen, a transplant nephrologist in North Carolina, the Iranians have managed to do something American policy makers have long thought impossible: They’ve found kidneys for every single citizen in need."
Everyone in Favor, Say Yargh!
By Joanna Weiss: "Long before they made their way into the workings of modern government, the democratic tenets we hold so dear were used to great effect on pirate ships. Checks and balances. Social insurance. Freedom of expression. So Leeson, an economics professor at George Mason University, will argue in his upcoming book, The Invisible Hook: The Hidden Economics of Pirates."
American Idol and Poverty
Ed Crane, President of the Cato Institute, suggests that celebrities take a good look at how to help the poor of the world create their own wealth.
Fairness, Idealism and Other Atrocities
By P.J. O'Rourke: "Well, here you are at your college graduation. And I know what you're thinking: 'Gimme the sheepskin and get me outta here!' But not so fast. First you have to listen to a commencement speech."
Bernstein on the History of Trade
"William Bernstein talks with EconTalk host Russ Roberts about the history of trade. Drawing on the insights from his recent book, A Splendid Exchange: How Trade Shaped the World, Bernstein talks about the magic of spices, how trade in sugar explain why Jews ended up in Manhattan, the real political economy of the Boston Tea Party and the demise of the Corn Laws in England."
Profit: Not Just a Motive
By Steve Horwitz: This article "explores the problems with the frequent argument on the left that we should 'take the profit motive out' of various activities and industries, especially health care."
Bail Bondsmen, Bounty Hunters and Private Prisons
"America’s free enterprise system is at work in many aspects of the criminal justice system. Profit-making bail bondsmen who help defendants post the money needed for their freedom pending trial are common in the U.S. but virtually unheard of across the rest of the world. Bounty hunters lured by big payouts find criminals who have previously eluded the police. And private companies are building and operating prisons and detention facilities."
Roberts on the Least Pleasant Jobs
"EconTalk host Russ Roberts talks about the claim that for capitalism to succeed there have to be people at the bottom to do the unpleasant tasks and that the rich thrive because of the suffering of those at the bottom. He critiques the idea that capitalism is a zero sum game where to get ahead, someone has to fall back. He also looks at the evolution of the least pleasant jobs over time and how technology interacts with rising productivity to make the least pleasant jobs more pleasant."
Fuel vs. Food
By Indur M. Goklany: "In recent years, we've heard that climate change could be catastrophic for nature and humanity. But it's becoming increasingly evident that over the next few decades, climate-change policies could prove even more catastrophic."
Free Trade, Free Markets: Rating Congress
This interactive web site allows users to examine how Congress and its individual members have voted over the years on bills and amendments affecting the freedom of Americans to trade and invest in the global economy.
The Biofuel Brew Ha-Ha
By Peter Suderman: Reason contributor Peter Suderman writes that the biofuels craze is boosting the price of beer, because farmers are shifting away from barley to biofuel crops made more lucrative by mandates and subsidies.
Inequality and Excess
By Arnold Kling: "What the American people really should feel awkward and defensive about is the level of inequality and excess of political power. Instead of asking ourselves what we can do about Warren Buffett or Bill Gates, we should be asking ourselves about what we can do about the Clintons and the Spitzers. Those who want more and more power should be our biggest concern."
McCloskey on Capitalism and the Bourgeois Virtues
"Deirdre McCloskey of the University of Illinois at Chicago and the author of The Bourgeois Virtues talks with EconTalk host Russ Roberts about capitalism and whether markets make people more ethical or less. They also discuss Adam Smith's world view, whether people were nicer in the Middle Ages, and the role of prudence and love."
Incentives, Incentives, Incentives
By Allen R. Sanderson: "If incentives work so well, maybe there are ways to improve public sector outcomes through the application of these same 'incentives matter' principles."
Showing That You Care: The Evolution of Health Altruism
By Robin Hanson: "Human behavior regarding medicine seems strange; assumptions and models that seem workable in other areas seem less so in medicine. Perhaps, we need to rethink the basics. Toward this end, I have collected many puzzling stylized facts about behavior regarding medicine, and have sought a small number of simple assumptions which might together account for as many puzzles as possible."
Bridges Over Troubled Water
By Christopher Preble and Jeremy Lott: "War costs money too. Round the bill for the bridges to nowhere that so incensed McCain up to $500 million. Our occupation of Iraq, which often seems to be getting nowhere, is costing north of $10 billion a month. That sum could finance the construction of 40 superfluous bridges this month and 480 bridges in a year."
Organ Transplants: Kidneys for Sale
"In his most controversial segment yet, reason.tv host Drew Carey offers a startling solution to the critical shortage in kidneys available for transplant: Pay people to donate their kidneys."
Public Choice
"Public Choice studies the intersection between economics and political science. The journal plays a central role in fostering exchange between economists and political scientists, enabling both communities to explain and learn from each other’s perspectives." Now available online.
Peace Won't Come to Zimbabwe
By Marian L. Tupy and David Coltart: "The case against Mr. Mugabe and the ZANU-PF for crimes against humanity would be compelling. They have turned one of Africa's most prosperous and relatively free nations into an Orwellian nightmare. Since 1994, the average life expectancy in Zimbabwe has fallen to 34 from 57 for women and to 37 from 54 for men. Some 3,500 Zimbabweans die every week from the combined effects of HIV/AIDS, poverty and malnutrition."
If I Were a Shill For Industry ...
By Donald J. Boudreaux: "A blogger recently complained that I (along with my fellow bloggers from George Mason University's Department of Economics) "seem to be shills for industry." This lazy accusation is as familiar as it is mistaken, for if I were truly a shill for industry ..."
Feel Safer Now?
From The Economist print edition: "After September 11th 2001, most countries beefed up security at airports and other vulnerable places. Tough-looking immigration officials no doubt made passengers feel safer, offsetting the irritation of longer queues. Yet doing something because it makes people feel good is not adequate justification. Is money devoted to counter-terrorism well spent?"
The Five Dumbest Product Bans
By Eli Lehrer: "Even as the array of consumer products available to the average American expands each day, a bewildering variety of government regulations serve to limit consumer choice. From the aircraft on which Americans fly to the food they buy in the grocery store, government regulation limits product choice at every turn."
I'd rather be Hanged for a Sheep than a Lamb: The Unintended Consequences of 'Three-Strikes' Laws
By Radha Iyengar: "Using criminal records data, I estimate that Three Strikes reduced participation in criminal activity by 20 percent for second-strike eligible offenders and a 28 percent decline for third-strike eligible offenders. However, I find two unintended consequences of the law. First, because Three Strikes flattened the penalty gradient with respect to severity, criminals were more likely to commit more violent crimes. Among third-strike eligible offenders, the probability of committing violent crimes increased by 9 percentage points. Second, because California's law was more harsh than the laws of other nearby states, Three Strikes had a "beggar-thy-neighbor" effect increasing the migration of criminals with second and third-strike eligibility to commit crimes in neighboring states."
Ohio Needs More Foreign Trade
By Daniel T. Griswold: "But tinkering with a 14-year-old trade agreement [NAFTA] will not bring an industrial renaissance to Youngstown and other Rust Belt cites. The relative decline of those regions dates back to the 1960s and 1970s, when the American economy began a transition from heavy industry toward an information-based service economy."
Gun Buybacks a Noble Idea That Always Misfires
By Alex Tabarrok: "Did no one running the program think to look at the price of a new gun? In fact, the first two people in line at one of the three buyback locations were gun dealers with 60 firearms packed in the trunk of their car. One wonders why the police even bothered to buy the guns from Oakland residents. Why not buy directly from gun manufacturers?"
Orders and Organizations
By Don Boudreaux: "More generally, it seems difficult for some people to grasp the fact that society and government are not identical -- or, more precisely, to grasp the fact that civil society can and does often thrive outside of government influence and, indeed, very often (I would say most often) in spite of such influence."
Atlas Hugged
Brian Doherty: "As executive vice president of the Cato Institute, Boaz is one of the media's primary go-to guys on libertarian thought and policy. And in his new book, "The Politics of Freedom," a collection of his short-form journalism from the past 25 years, Boaz pushes an interesting and counterintuitive belief about American politics. The political spectrum, he argues, contains a lot more libertarians than the two major party's stances would lead you to believe."
It's an Election, Not a Revolution
By Tyler Cowen: "And if you’re still worrying about how to vote, I have two pieces of advice. First, spend your time studying foreign policy, where the president has more direct power, and the choice of a candidate makes a much bigger difference. Second, stop worrying and get back to work."
The Ultimate Scholar
By Donald J. Boudreaux: "Last Friday, Feb. 8, marked the 10th anniversary of the death of the great economist Julian Simon. Although he never received the professional or popular acclaim of economists such as Milton Friedman, Paul Samuelson or F.A. Hayek, Simon's insights and work rank with those of history's greatest social scientists."
Living Large: America's Middle Class
"To hear the Lou Dobbses and Bill O'Reillys of the world--not to mention politicians ranging from Ron Paul to Hillary Clinton--the middle class of America (however you define that term) has never had it so tough. Between credit squeezes, out-of-control immigration, rising costs of education and health care and everything else, it's all darkness out there for those of us who are neither millionaires nor welfare cases, right?
In 'Living Large,' Drew Carey and reason.tv examine the plight of the American middle class. What do they find? "
Is the Gold Standard Still the Gold Standard among Monetary Systems?
By Lawrence H. White: "Critics have raised a number of theoretical and historical objections to the gold standard. Some have called the gold standard a "crazy" idea. The gold standard is not a flawless monetary system. Neither is the fiat money alternative. In light of historical evidence about the comparative magnitude of these flaws, however, the gold standard is a policy option that deserves serious consideration."
Atlas Shrugged and Public Choice: The Obvious Parallels
By Bryan Caplan: "Though there is little evidence of mutual influence, Ayn Rand and public choice converge on a strikingly similar vision of the political process. Both emphasize the contradiction between the propaganda of government intervention and the reality. Government supposedly intervenes to advance the interests of the majority. In reality, however, its goal to advance the interests of political insiders at the expense of everyone else."
The Economics of Tolerance
With Will Wilkinson: "When the economy's good, Americans tend to act better toward their fellow citizens. But commentator Will Wilkinson says in a sliding economy, we tend to slam the gates of opportunity."
Flex-Fuel Nonsense
By Jerry Taylor: "Congress can no more guarantee that fuel prices will go down from now until the end of time than it can guarantee a robust sex life for fat, balding, middle-aged men. Fuel prices are subject to supply and demand curves that do not answer to Congress — particularly in global energy markets."
U.S.-Imposed Border Bedlam Will Hurt Michigan
By Jim Harper: "Nobody imagined when Congress created the Department of Homeland Security that the department itself would mount the next attack on American transportation, travel and trade. But the department begins an assault this week that will do billions of dollars in damage if it is not stopped."
Global Warming: Risks and Consequences
"Last fall, at the Reason in DC conference, one of the most strongly attended and memorable panels was titled "Climate Change: Risks and Consequences" and featured Lynne Kiesling, a senior lecturer in economics at Northwestern University, proprietor of the blog Knowledge Problem, and an expert in retail electricity markets; Ronald Bailey, reason's longtime science correspondent and author of, among other books, Liberation Biology: The Moral and Scientific Case for the Biotech Revolution and ECOSCAM: The False Prophets of Environmental Apocalypse; and Fred L. Smith, Jr., the founder and president of Competitive Enterprise Institute."
Tim Hartford on BHTV
Cato's own Will Wilkinson speaks with author and economist Tim Hartford about his new book, The Logic of Life. "Tim’s book isn’t just another foray into pop econ. It’s a fascinating and entertaining overview and synthesis of a good deal of the most important recent research in economics." - Will Wilkinson
Unintended Consequences
By Stephen J. Dubner and Steven D. Levitt: "But with a government that is regularly begged for relief — these days, from mortgage woes, health-care costs and tax burdens — and with every presidential hopeful making daily promises to address these woes, it might be worth encouraging the winning candidate to think twice (or even 8 or 10 times) before rushing off to do good. Because if there is any law more powerful than the ones constructed in a place like Washington, it is the law of unintended consequences."
The Foolishness of Economic 'Stimulus'
By Donald J. Boudreaux: "The best way for policymakers to foster such growth is to avoid panicking over any current economic downswing. Instead, they should focus on getting the economic fundamentals right. Such emphasis might not make things better – or even make things appear to be better – today, but it will make our tomorrows as bright as possible."
Econ Journal Watch
"The electronic triannual Econ Journal Watch publishes Comments on articles appearing in economics journals and serves as a forum about economics research and the economics profession. EJW watches the journals for inappropriate assumptions, weak chains of argument, phony claims of relevance, and omissions of pertinent truths."
Markets in Everything.com
Michael Cleverly has compiled a website consisting of all the "Markets in Everything" posts found on various economics blogs. Highlights include an alarm clock that spends your money if you oversleep, settling a debt with a severed finger, prom date rentals, Bibles for porn stars, and many other ingenious/wacky things.
Don Boudreaux on Globalization and Trade Deficits
"Don Boudreaux, of George Mason University, talks about the ideas in his book, Globalization. He discusses comparative advantage, the winners and losers from trade, trade deficits, and inequality with EconTalk host Russ Roberts."
Dismal Science Sees Upbeat Future
By Alexander Tabarrok: "Forget the talk of recession. The world is about to enter a new era in which miracle drugs will conquer cancer and other killer diseases and technological and scientific advances will trigger unprecedented economic growth and global prosperity."
What to Expect When You’re Free Trading
By Steven E. Landsburg: "All economists know that when American jobs are outsourced, Americans as a group are net winners. What we lose through lower wages is more than offset by what we gain through lower prices. In other words, the winners can more than afford to compensate the losers. Does that mean they ought to?"
The Real Key to Development
By Mary Anastasia O'Grady: "The Index [of Economic Freedom] also reports that the freest 20% of the world's economies have twice the per capita income of those in the second quintile and five times that of the least-free 20%. In other words, freedom and prosperity are highly correlated."
An Empirical Analysis of Street-Level Prostitution
By Steven D. Levitt and Sudhir Alladi Venkatesh: "Unlike most other crimes, prostitution is based on markets, and thus potentially of special interest to economists. It is thus surprising that amidst the burgeoning literature on the economics of crime, there is little analysis of prostitution."
So We Thought. But Then Again . . .
By Tyler Cowen: "Harry S. Truman once said he wanted to talk to a one-armed economist, “so that the guy could never make a statement and then say: ‘on the other hand.’ ” Yet economic knowledge continues to progress in unexpected ways. Here are a few of the things we learned in the last 12 months:"
The Failure of U.S. Organ Procurement Policy
By T. Randolph Beard, John D. Jackson, and David L. Kaserman: "In this article, we calculate how many lives will be lost if the United States continues in its current policy course. We do this to motivate policymakers to stop implementing one ineffectual policy action after another and attack the organ shortage with more effective weaponry in the form of financial incentives."
The Micromagic of Microcredit
By Karol Boudreaux and Tyler Cowen: "If a poor family is able to keep a child in school, send someone to a clinic, or build up more secure savings, its well-being improves, if only marginally. This is a big part of the reason why poor people are demanding greater access to microcredit loans. And microcredit, unlike many charitable services, is capable of paying for itself—which explains why the private sector is increasingly involved. The future of microcredit lies in the commercial sector, not in unsustainable aid programs."
5 Myths About Our Ballot-Box Behavior
By Bryan Caplan: "We haven't even made it to the New Hampshire primary, but millions of Americans are already sick of hearing about the 2008 race. Bad as the torrent of news is, I find the repetition of myths about voters and voting even more galling. Whether you're arguing with friends or watching the news, you hear many claims about how American democracy works that just aren't true."
Paths to Property
By Karol Boudreaux and Paul Aligica: "The study finds that the “easy option” of agencies entering less-developed countries and using blueprints to try to recreate institutions in Africa that work effectively in the West often fails miserably. Indeed, the failures of such approaches can give the whole privatisation and property rights process, vital for sustainable economic growth, a bad name."
Raw Deal
By Sallie James: "Hollywood had better hope that a services liberalization deal reached Dec. 17 between the United States and the European Union holds. Without a successful resolution to the long-running Internet gambling dispute, American movies, music and software could be vulnerable to copyright infringement."
Regulatory Competition: A Primer
By Jennifer Smith-Bozek: "A given government jurisdiction—local, state, or federal—can provide regulatory alternatives to compete with those of another government. Regulatory competition can attract more businesses and jobs, yield regulations that are more efficient and less expensive, and thereby provide more options to consumers."
Milton Friedman with Charlie Rose
"An hour with Nobel Prize-winning economist Milton Friedman. Friedman discusses his life, his contributions to economics, the Republican Party and his view on the direction of the United States and the world in coming years."
Mugabe's Apologists
By Marian Tupy: "Robert Mugabe's participation in the European Union-Africa summit in Lisbon over the weekend was a triumph of Zimbabwean diplomacy. Both African and EU leaders must share the blame for this farce. Zimbabwe's foreign ministry managed to portray the octogenarian dictator, who has presided over widespread violations of human rights and an astonishing economic collapse, as the victim of a Western conspiracy."
A Bill of Rights Europe Did Not Need
By Anthony de Jasay: "Even if it were less woolly and silly, the Charter of Fundamental Rights could hardly become a force for good."
Boettke on Austrian Economics
Pete Boettke, of George Mason University, talks with EconTalk host Russ Roberts about the origins and tenets of Austrian economics.
Economics Books and Podcasts: The Class of 2007
By Arnold Kling: "For people who like to read about economics, 2007 produced a bumper crop of outstanding books. Here are my top recommendations."
Creative Destruction's Reconstruction: Joseph Schumpeter Revisited
By J. Bradford Delong: "Perhaps this next century will give Schumpeter's work its proper place as the power of innovation to transform, create, enrich, and destroy makes itself manifest globally. And while we marvel at how much he got right, we can hope Schumpeter was wrong in his political analysis. One great test of our era will be whether creative destruction can flourish alongside public order and political liberty."
The Dollar Is Falling, and That’s Good News
By Tyler Cowen: "But when it comes to currencies, a higher value neither brings national success nor predicts future prosperity. The measure of a nation’s wealth is the goods and services it produces, not the relative standing of its currency."
Pigs Don't Fly: The Economic Way of Thinking about Politics
By Russell Roberts: "Politicians are just like the rest of us. They find it hard to do the right thing. They claim to have principles, but when their principles clash with what is expedient, they often find a way to justify their self-interest."
Munger on Fair Trade and Free Trade
"Mike Munger, frequent guest and longtime Econlib contributor, speaks with EconTalk host Russ Roberts about fair trade coffee and free trade agreements. Does the premium for fair trade coffee end up in the hands of the grower? What economic forces might stop that from happening?"
Fed Up
By Alvaro Vargas Llosa: "All in all, financial instability has been far greater since the creation of the Federal Reserve. What did the Great Depression teach us? Essentially that even with the best of intentions, it is impossible for the authorities to manage the supply of money in accordance with the exact needs of the economy."
That "Top One Percent"
By Thomas Sowell. People who are in the top one percent in income receive far more than one percent of the attention in the media. Even aside from miscellaneous celebrity bimbos, the top one percent attract all sorts of hand-wringing and finger-pointing. Who are those top one percent? For those who would like to join them, the question is: How can you do that?
Robert Frank's Strange Case for Taxing "The Rich"
By David R. Henderson: "At one time, critics of economic freedom justified high taxes on high-income people on the grounds of ability to pay. They at least admitted that those taxes hurt those people. But the growing availability to even the poor of goods that were only recently thought of as luxury goods has weakened that argument. Now, Robert Frank argues for higher taxes on high-income people on the grounds that it is good for them."
Economics in Many Lessons: A Better Brew for Rwanda
By Donald J. & Karol C. Boudreaux: "In some parts of the long-suffering continent, good things are happening and too few people, in Africa and elsewhere, know about them."
Adam Smith - A Primer
"Despite his fame, there is still widespread ignorance about the breadth of Adam Smith’s contributions to economics, politics and philosophy. In Adam Smith – A Primer, Eamonn Butler provides an authoritative introduction to the life and work of this ‘founder of economics’. "
Discover Your Inner Economist: Use Incentives to Fall in Love, Survive Your Next Meeting, and Motivate Your Dentist
"The economist and blogger Tyler Cowen provides quirky and insightful advice for life based on his signature urbane style of economic reasoning."
Why We Trade
By Russell Roberts: "We’re used to shrugging off all sorts of rhetorical gobbledygook from our politicians. But when you hear U.S. presidential candidates start to mouth off about free trade, watch your wallet: A discredited 14th-century theory of economics is enjoying a dangerous renaissance in the 2008 campaign. "
Fat on the Farm Bill
By Dr. Sallie James: The Farm Bill is the ultimate example of concentrated benefits and diffused costs. Farm subsidies are hard to justify on their merits, and even harder to justify when they go to massive corporate farms.
Undercover Economist: Your Vote Doesn't Count
The concept of a “vote” is meaningless when it comes to the market. If Benn’s claim [that the poor are better represented in a democracy than in a market] means anything at all, surely it means this: that a poor person has more influence over the service he or she receives from the government than over the service he or she receives from the market. That claim means something, but it is also hard to sustain.
Let Them Eat Laptops
By Daniel R. Ballon: "The '$100 laptop,' which actually costs $188, can only be purchased at a minimum quantity of 250,000. OLPC targets countries like Nigeria, where one out of three children suffer from malnutrition. There a $50 million minimum investment could instead be used to feed more than a million children for an entire year."
The Political Economy of Force-Feeding
By Anthony de Jasay: "Compulsory education is delivering contestable results. Governments seek a remedy by providing more of it."
What Can the United States Learn from the Nordic Model?
By Daniel J. Mitchell: "Conservative critics correctly condemn the large welfare states, but often overlook the positive results generated by laissez-faire policies in other areas. Liberals, meanwhile, exaggerate the economic performance of Nordic nations in an effort to justify welfare-state policies, while failing to acknowledge the role of freemarket policies in other areas."
The Tragedy of the Commons and the Implications for Environmental Regulation
Bruce Yandle of Clemson University and George Mason University's Mercatus Center looks at the tragedy of the commons and the various ways that people have avoided the overuse of resources that are held in common.
Free Trade: America’s Opportunity
By Leland Yeager: "Want to read an economist's economist? Want an example of scholarly writing that is crystal clear? Want to understand better the case for free trade? If so, you can do no better than to read this 1954 monograph." - Dr. Donald Boudreaux, Chairman of the Economics Department of George Mason University
The Question of Monopolies
By Nathaniel Branden. A reader asks "In a society of laissez-faire capitalism, what would prevent the formation of powerful monopolies able to gain control over the entire economy?"
What Do We Really Know About the Spread of AIDS?
By Emily Oster. Emily Oster, a University of Chicago economist, looks at the stats on AIDS in Africa -- and comes up with a stunning conclusion: Everything we know about AIDS in sub-Saharan Africa is wrong. We look for root causes such as poverty and poor health care -- but we also need to factor in, say, the price of coffee, and the routes of long-haul truckers. In short, there is a lot we don't know; and our assumptions about what we do know may keep us from finding the best way to stop the disease.
Our Priorities for Saving the World
By Bjorn Lomburg : "Given $50 billion to spend, which would you solve first, AIDS or global warming? Danish political scientist Bjorn Lomborg put this question to economists and students around the world, and the answers they came up with may surprise you. Ranking our toughest problems not on any moral scale but simply by how effectively they can be solved, Lomborg and his colleagues demand we take a fresh look at doing good."
Let's Take a New Look at African Aid
By Andrew Mwenda: "In this provocative talk, journalist Andrew Mwenda asks us to reframe the "African question" -- to look beyond the media's stories of poverty, civil war and helplessness and see the opportunities for creating wealth and happiness throughout the continent. Most important, he says, the solution to Africa's problems is not more aid."
Chill Out
By Bjorn Lomborg: "The discussion about climate change has turned into a nasty dustup, with one side arguing that we're headed for catastrophe and the other maintaining that it's all a hoax. I say that neither is right. It's wrong to deny the obvious: The Earth is warming, and we're causing it. But that's not the whole story, and predictions of impending disaster just don't stack up."
In Defense of Scalpers
By David Harsanyi: "In the end, I’m not sure why it’s fair to allow monopolies to sell tickets and not individuals. Turning a profit on your investment doesn’t sound like a crime to me. It sounds like America."
So You Want to be a Masonomist
By Arnold Kling: "Years from now, perhaps people will be saying that something big got started recently at the George Mason University department of economics. Maybe if you become a Masonomist now, you will be getting in early on a trend that will soon catch on much more widely."
McCraw on Schumpeter, Innovation, and Creative Destruction
"Thomas McCraw of Harvard University talks about the ideas of Joseph Schumpeter from his book, Prophet of Innovation: Joseph Schumpeter and Creative Destruction. McCraw and EconTalk host Russ Roberts discuss innovation, business strategy, the role of mathematics in economics, and Schumpeter's vision of competition embodied in his most important idea--creative destruction."
Robert Frank on Economics Education and the Economic Naturalist
"Frank argues that the traditional way of teaching economics via graphs and equations often fails to make any impression on students. In this conversation with host Russ Roberts, Frank outlines an alternative approach from his new book, where students find interesting questions and enigmas from everyday life. They then try to explain them using the economic way of thinking."
Democracy and Other Failures
By Doug Campbell: "The theory of public choice helps explain why we get stuck with so many bad economic policies. Or does it?"
Stockholm Syndrome
By Michael C. Moynihan: "Western Europe's most famously socialist country is slowly plodding toward free-market reforms."
Something Besides Money Growth Causes Inflation? It Just Ain't So!
By Howard Baetjer, Jr.: "In the words of the great Milton Friedman, whose masterwork with Anna Schwartz, A Monetary History of the United States, did a lot to settle the matter, 'Inflation is always and everywhere a monetary phenomenon.' Unfortunately, many educated commentators have not learned this important truth."
The Grand Old Spending Party: How Republicans Became Big Spenders
By Stephen Slivinski: "Republicans could reform the budget rules that stack the deck in favor of more spending. Unfortunately, senior House Republicans are fighting the changes. The GOP establishment in Washington today has become a defender of big government."
Economic Freedom Breeds Prosperity
By James Dorn: "The key lesson from Hong Kong's "small government, big market" model of development is that economic freedom is the best path toward sustainable development, understood as increasing the range of choices open to people. "
The Myth of the Rational Voter: Why Democracies Choose Bad Policies
By Bryan Caplan: "In theory, democracy is a bulwark against socially harmful policies. In practice, however, democracies frequently adopt and maintain policies that are damaging. How can this paradox be explained?"
Peace on earth? Try free trade among men
"Much of the political violence that remains in the world today is concentrated in the Middle East and Sub-Saharan Africa -- the two regions of the world that are the least integrated into the global economy. Efforts to bring peace to those regions must include lowering their high barriers to trade, foreign investment, and domestic entrepreneurship."
What Can Foreign Aid Do for The World's Poor?
"Billions upon billions have been spent by governments and institutions like the World Bank over the last half-century to launch less developed countries onto a trajectory of growth. Yet despite all this money—or perhaps because of it—many countries continue to languish in abject poverty. Do we need to spend even more, faster?" William Easterly, Branko Milanovic, Deepak Lal, Jules S. Coleman, and Steve Radelet engage in a debate about the problems with foreign aid and what can be done about it.
Why Does Latin America Fail?
By Mario Vargas Llosa: "Institutions cannot flourish in a country if the people don’t believe in them—if, on the contrary, people have a fundamental distrust of their institutions and see in them not a guarantee of security, or of justice, but precisely the opposite."
Private Education is Good for the Poor
by James Tooley and Pauline Dixon: "Our findings from a two-year in-depth study in India, Ghana, Nigeria, and Kenya suggest that these conclusions are unwarranted. Private schools, we argue, can play—indeed, already are playing—an important, if unsung, role in reaching the poor and satisfying their educational needs."
The History of Economic Thought Website
This web site serves as a repository of collected links and information on the history of economic thought, from the ancient times until the modern day. It is designed for students and the general public, who are interested in learning about economics from a historical perspective.
Underdevelopment in Sub-Saharan Africa: The role of the private sector and political elites
In this paper, Moeletsi Mbeki explains how economic growth in Africa, as in the rest of the world, depends on a vibrant private sector. Entrepreneurs in Africa, however, face daunting constraints. They are prevented from creating wealth by predatory political elites that control the state. African political elites use marketing boards and taxation to divert agricultural savings to finance their own consumption and to strengthen the repressive apparatus of the state. Peasants, who constitute the core of the private sector in sub-Saharan Africa, are the biggest losers.In order for Africa to prosper, peasants need to become the real owners of their primary asset — land — over which they currently have no property rights.
Sports, Jobs, & Taxes: Are new stadiums worth the cost?
"Advocates argue that new stadiums spur so much economic growth that they are self-financing: subsidies are offset by revenues from ticket taxes, sales taxes on concessions and other spending outside the stadium, and property tax increases arising from the stadium's economic impact. Unfortunately, these arguments contain bad economic reasoning that leads to overstatement of the benefits of stadiums."
The Disregard of Reality
By Peter Bauer: "The tendency to disregard simple realities has undermined the poise, self-assurance, and stance of the West in the international arena. It has also underpinned the uncritical acceptance of ideas and policies damaging to the West, and much more so to the peoples of the Third World. This is not surprising. Polities and societies bent on disregarding reality must be vulnerable to adversity, and also to threats from within and without."
Ending Mass Poverty
Economic growth is the "only path to end mass poverty," says economist Ian Vásquez, who argues that redistribution or traditional poverty reduction programs have done little to relieve poverty. Vásquez writes that the higher the degree of economic freedom -- which consists of personal choice, protection of private property, and freedom of exchange -- the greater the reduction in poverty. Extending the system of property rights protection to include the property of poor people would be one of the most important poverty reduction strategies a nation could take, he says.
State and Local Tax Policy
Although the federal government spends more than the states, state taxes and budgets are also an area of interest for Cato scholars. Read what they have to say about keeping the size of state government under control and how to keep state taxes down to reasonable levels.
Tax and Budget Bulletin
Cato's Tax & Budget Bulletin discusses issues in fiscal policy, money, and taxation. This page is an archive of past issues covering a wide range of different topics in this area.
Regulation Magazine
Regulation has examined every market, from agriculture to health and transportation, and nearly every government intervention, from interstate commerce regulation to labor law and price controls. It is an expansive publication - casting a powerful light onto the overall impact of regulatory polices to give you sharp, comprehensive perspectives; and, precise - exploring key subjects with incisive, point-by-point analysis.
Unintended Consequences
By Rob Norton: "The law of unintended consequences, often cited but rarely defined, is that actions of people - especially of government - always have effects that are unanticipated or "unintended." Economists and other social scientists have heeded its power for centuries; for just as long, politicians and popular opinion have largely ignored it."
Rent Seeking Behind the Green Curtain
Jonathan H. Adler explains that "due to the cost and complexity of environmental rules, the environmental policy arena presents an extremely attractive target for those who wish to seek rents in Washington. Indeed, if there is one consistent interest group, it is the inside-the-beltway consultants, lobbyists, and litigators, who benefit from the continuation of a Byzantine regulatory structure, the intimate knowledge of which is incredibly valuable and rare."
The Tradition of Spontaneous Order
By Norman Barry: It is not that the theory of spontaneous order precludes planning as such; it is that only planning by individuals in decentralized markets will tend towards an optimal use of knowledge. The central planner has only that knowledge available to him, which is less than that which is co-ordinated among all the agents in a market process. Furthermore, because the future is unknowable, a system that relies on liberty allows for the accidental and spontaneous.
The Fundamentals of Rent Seeking
By Gordon Tullock: "Once the concept of rent seeking was discovered - and defined as the outlay of resources by individuals and organizations in the pursuit of rents created by government - there followed a flourishing of research as relevant ideas began to disseminate throughout economics. It is now rare to find an issue of an economics journal that does not refer at least implicitly to the concept of rent seeking."
Community-Run Fisheries: Avoiding the "Tragedy of the Commons"
By Donald R. Leal: "Community-Run Fisheries: Avoiding the "Tragedy of the Commons" presents case after case of communities that have effectively protected their fishing territories and preserved fish for the future."