You are browsing the archive for 2013 April 01.

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Why the Recovery is Taking so Long, What to Do About It

April 1, 2013 in Economics

By Mark Thornton

STREAMING VIDEO — Why the Recovery Is Taking So Long and What to Do About It
By Dr. Jeffrey Herbener
Jeffrey M. Herbener is a senior fellow at the Ludwig von Mises Institute. He is a professor at Grove City College and the Director of the Austrian Student Scholar Conference.

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Source: MISES INSTITUTE

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The Gold Standard that Never Was

April 1, 2013 in Economics

By Mark Thornton

Thorsten Polleit delivered a speech at the Austrian Economics Research Conference entitled “The Gold Standard That Never Was.” Thorsten was interviewed by GoldMoney’s Andy Duncan. The speech is discussed in this podcast. The conditions that he sees as being necessary for a gold standard to be compatible with free market principles are discussed. He explains how a 100% commodity backed currency would work with regards to the banking system.

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Source: MISES INSTITUTE

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A Tactful Move Toward Marriage Equality: How the Supreme Court Will Give Both Sides a Victory in the Gay Marriage Cases

April 1, 2013 in Economics

By Trevor Burrus

Trevor Burrus

The dust has now settled after the Supreme Court heard oral arguments on the issue of gay marriage. As we’ve seen many times in the last few years, all eyes were once again on the Court to decide a major issue of national importance. Throngs of people once again gathered outside the Court, just a little more colorfully this time.

Based on oral arguments, it seems the Court will likely avoid deciding that every state must allow gay marriage while simultaneously overturning the federal government’s Defense of Marriage Act (DOMA). Everyone will get a little something, but, most importantly, the struggle for gay rights has been brought forcefully to the public eye. With or without the Court’s help, the right to gay marriage is moving in the right direction.

Either through the Court or through the democratic process, gay people will soon have the freedom to spend their lives with someone they love.”

The issue of gay marriage arrived at the Court in two cases. Hollingsworth v. Perry concerns California’s Proposition 8, a ballot measure passed in 2008 to overturn the California Supreme Court’s ruling that marriage discrimination is not permitted by the California Constitution. United States v. Windsor is a challenge to DOMA, signed into law by President Clinton in 1996 and also prompted by a 1993 Supreme Court of Hawaii decision permitting gay marriage.

There is an odd interaction between these two cases, an interaction of which the Court is well aware. On one hand, there is the argument that laws such as DOMA must be struck down because the federal government has no business being involved in decisions traditionally left to the states, which certainly includes the definition of marriage. On the other hand, the Proposition 8 challenge is based on the idea that states are not allowed to discriminate in their definitions of marriage.

Finding a way out of this thicket will take some creative judging, and the Court has many options open to it. The least likely outcome is that the Court will strike down all state statutes prohibiting same-sex marriage. Although this may be the correct decision legally, and I believe it is, it may not be the correct decision prudentially. Because the Supreme Court lacks any method of enforcing its own rulings, its legitimacy is deeply intertwined with how much respect it gets as an institution. The deep, national divide produced …read more
Source: OP-EDS

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Budget Problems Continue in Washington

April 1, 2013 in Economics

By Tad DeHaven

Tad DeHaven

The President on Tuesday signed the continuing resolution that funds the government through September and (gasp) keeps the sequester cuts intact. Now that it appears sequestration isn’t going away (and yet the earth continues to spin merrily on its axis), the focus should be on how this small step might be extended.

Unfortunately, the reaction to Paul Ryan’s relatively modest budget indicates the fight for smaller government will continue to be an uphill battle in the current political climate. The Ryan budget has brought predictable condemnation from the political left. Sen. Harry Reid called it “extreme,” and the New York Times called it “the worst of the Ryan budgets.” The plan’s sin: restraining the growth of federal spending to 3.4 percent instead of 5 percent.

Serious policymakers need to start explaining to the American people how the federal government doing less will do more to enhance their personal and economic well-being.”

While there are some of us that don’t feel the Ryan budget goes nearly far enough, it was never going to become law as is with a Democratic White House and Senate. But here’s the important question: does sequestration and Ryan’s follow-up give proponents of limited government a reason to be optimistic?

Currently, the answer is no.

Sequestration has yet to cause a public revolt and the markets have treated it with indifference throughout. Although the cuts that happened under sequestration are hardly an occasion for a victory lap, they are a small and welcome bit of evidence that government can spend less without society as we know it coming to an end.

Sequestration reduces federal spending by $44 billion this year, which is a relatively small sum considering that total spending will be around $3.5 trillion. The budget deficit alone is projected to be around $850 billion. That means to balance the budget this year, the spending cuts would have to be almost 20 times larger. However, sequestration barely scratches entitlement programs, which dominate the federal budget and are the source of our long-term fiscal problems. And because it doesn’t actually terminate any agencies or programs, spending can be restored in the future.

So in the big picture, sequestration hasn’t changed all that much. Federal spending is still on a dangerous upward trajectory. Unfortunately, while there is much talk about the need to reform the welfare state in order to make it more affordable, the underlying desirability of …read more
Source: OP-EDS

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The Minimum Wage Typifies Much That Is Wrong with Washington

April 1, 2013 in Economics

By Doug Bandow

Doug Bandow

President Barack Obama wants to give low-wage Americans a raise. Actually, he doesn’t plan on writing anyone a check. Rather, he wants to force other people to write checks.

It’s a bad idea, no matter how popular.

In his State of the Union speech President Obama argued: “no one who works full-time should have to live in poverty.” He proposed hiking the minimum wage to $9.00 an hour, a 24 percent jump, which “would raise the incomes of millions of working families.” (Other Democrats have advocated $10.10 per hour.)

Raising the minimum wage would be both counterproductive and unfair.”

The president suggested that employers, too, would benefit: “For businesses across the country, it would mean customers with more money in their pockets.” Venture capitalist Nick Hanauer was even more fulsome. He advocated more than doubling the minimum, to $15 per hour, which, he contended, would “stimulate the economy, narrow the gap between rich and poor, and end the ridiculous subsidization of private low-wage companies by taxpayers.”

It would be the ultimate free lunch.

But if government can make the poor rich, enhance consumer demand, boost the economy, and heal the human spirit, why stop at $9 an hour? Why not set the minimum at $90 per hour? Or $900 per hour? The difference between $9 and $900 is one of degree, not kind.

Alas, profit-making companies must earn more than they spend. Workers must produce more than they are paid. As government raises the minimum wage, it prices some employees out of the market. Mark Wilson of Applied Economic Strategies warned in a Cato Institute study: “These behavioral responses usually offset the positive labor market results that policymakers are hoping for.”

The bulk of economic studies—“most of the academic evidence,” as Wilson put it—demonstrate that raising the minimum wage destroys jobs. He explained: “The main finding of economic theory and empirical research over the past 70 years is that minimum wage increases tend to reduce employment.” The only question is how much.

The Department of Labor concluded that the first minimum wage, 25 cents per hour in 1938, cost the jobs of 30,000 to 50,000 of the 300,000 workers who were covered and had previously earned below the minimum. In following years, noted Wilson, “economists began to accumulate statistical evidence on the effects” of minimum wage increases, which found a disproportionate impact on lower-skilled workers.

In 1977 Congress established the Minimum Wage Study …read more
Source: OP-EDS

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Obama Didn't Lose Iraq

April 1, 2013 in Economics

By Doug Bandow

Doug Bandow

A decade ago President George W. Bush invaded Iraq. U.S. forces quickly triumphed. But that counted for little when Secretary of State John Kerry visited Baghdad last weekend seeking Iraqi assistance against Syria’s Bashar Assad. What Washington thinks doesn’t matter much in Baghdad these days.

Most Americans recognize that blame for the Iraq debacle lies with the Bush administration. It was a foolish, unnecessary war followed by a myopic, bungled occupation. No wonder Washington is finding benefits from its policy of being illusive at best.

Yet the leading cheerleaders for the war remain undaunted.

Responsibility for the Iraq debacle, from start to finish, lies with the Bush administration.”

Of course, even they acknowledge that there have been problems. For instance, the Hoover Institution’s Fouad Ajami, a prominent defender of intervention in Iraq, admitted that as U.S. troops came home Iraqi Prime Minister Nouri al-Maliki “was beginning to erect a dictatorship bent on marginalizing the country’s Kurds and Sunni Arabs and even those among the Shiites who questioned his writ.” Moreover, Ajami cited an Iraqi cabinet minister who observed that “With all the money the U.S. has spent, you can go in Iraq and you can’t find one building or project built by the U.S. government.”

National Review’s editors allowed that Maliki “has ruled as an authoritarian and Shia sectarian and has allied himself with Iran.” Moreover, “the promise of [Iraq’s early] elections, and of Iraq’s new democratic structures, hasn’t been fulfilled.”

The Wall Street Journal editors acknowledged that Maliki “has an authoritarian streak.” Moreover, opined the paper, “the Iraq war is a cautionary tale about the difficulty democracies have in sustaining lengthy military campaigns for any goal short of national survival.”

However, the Bush administration most assuredly was not to blame for such frustrated expectations. Rather, neoconservatives teach that everything is Barack Obama’s fault, including Iraq.

Yes, he came into the conflict late. Yes, he followed the Bush administration’s withdrawal timetable and honored his predecessor’s agreement with the Maliki government. Yes, he implemented the wishes of the majority of Americans.

But so what? He could have kept U.S. forces in Iraq.

Declared the Journal: “President Obama could have capitalized strategically on [Bush’s success] by negotiating a status of forces agreement that anchored the U.S. relationship to Iraq and provided a U.S. military bulwark against Iran.” Added the Journal, the president “could have struck a deal to station 10,000 or so …read more
Source: OP-EDS

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How Do You Solve a Problem Like Korea?

April 1, 2013 in Economics

Tensions are mounting on the Korean peninsula amid increasing rhetoric from the North. Kim Jong-un, North Korea’s leader, has declared that nuclear weapons are “the nation’s life.” Such provocations are not new and likely add up to more posturing and bluster, but the heightened strain emphasizes that a new approach to relations with the reclusive regime is needed. Writing in the Washington Post, Cato scholar Ted Galen Carpenter argued that, “In a scenario with no good options, we may have to learn to live with a nuclear-armed North Korea.”

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Source: CATO HEADLINES

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Stalin Died 60 Years Too Late

April 1, 2013 in Economics

By Doug Bandow

Doug Bandow

Joseph Stalin died 60 years ago this month. Yet few people in the U.S. paused to mark the passing of one of history’s greatest mass murderers.

Death respects no one, no matter how monumental their achievements or, in this case, their crimes. No different was Joseph Stalin, good ole’ Uncle Joe in World War II mythology. It is remarkable how someone seemingly so banal and mediocre could have caused so much misery and death.

Stalin was born Joseph Dzhugashvili in 1878 in Gori, Georgia, a province of Imperial Russia. Although he attended an Orthodox seminary he did not inherit his mother’s religious faith. By his early 20s he was a Bolshevik agitator. In 1917 he was elected to serve on the Bolshevik Central Committee. His record in the Russian Civil War and Polish-Soviet War was less than stellar, but did not slow his political ascent.

And now we mark the 60th anniversary of his death.”

In 1922 he was chosen party General Secretary, which he turned into a position of power. Although Vladimir Lenin turned against Stalin, the former was incapacitated before he could act. Lenin’s death in 1924 triggered a lengthy and multi-sided power struggle. Through it all Stalin demonstrated political dexterity if not genius. He allied with Lev Kamenev and Grigory Zinoviev against Leon Trotsky, only to later dismiss Kamenev and Zinoviev. Other old revolutionaries, including Nikolai Bukharin and Alexey Rykov, also ended up on Stalin’s target list. By 1928 he was in full control.

There were still rivals, however, and in 1934 Sergei Kirov, who ruled the Leningrad Communist Party, was murdered. Even if the killing was not done at Stalin’s behest it provided him with a convenient excuse to purge the Soviet Union of his enemies. The Great Terror ensued, imprisoning and killing millions. Kamenev, Zinoviev, Bukharin, and Rykov all were executed after extraordinary show trials. In 1940 Stalin reached beyond the USSR to murder Trotsky, then in exile in Mexico.

It was a difficult time to be a communist. “I have seen the future and it works,” declared journalist Lincoln Steffens in 1919. However, the truth shone through for those who looked closely, despite the efforts of the misguided, like Steffens, who eventually became disillusioned with communism, and the malicious, such as Walter Duranty, who covered up the mass starvation-murder called the Holodomor in Ukraine while reporting for the New York Times (which has …read more
Source: OP-EDS