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Sen. Paul Responds to President Obama’s Comments on Syria

August 31, 2013 in Politics & Elections

WASHINGTON, D.C. – Sen. Rand Paul released the following statement today in response to the President’s request for Congressional authorization of the use of military force:
‘I am encouraged President Obama now says he will fulfill his constitutional obligation to seek authorization for any potential military action in Syria. This is the most important decision any President or any Senator must make, and it deserves vigorous debate.’

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Source: RAND PAUL

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Mises and Hayek at Columbia and the Bank of International Settlements

August 30, 2013 in Economics

By John P. Cochran

Mises and Hayek at Columbia and the Bank of International Settlements

Peter Boettke at Coordination Problem highlighted a paper by Guillermo Calvo of Columbia University, Puzzling Over the Anatomy of Crises: Liquidity and the Veil of Finance,” which  is very sympathetic to the contributions of Mises and Hayek . Calvo goes so far as to argue, “the Austrian school of the trade cycle was on the right track.”

One of Calvo’s references, Claudio Borio (2012 ) “The financial cycle and macroeconomics: What have we learnt?” (Bank of International Settlements Working Paper No 395 Dec 2012) should also be of interest.

The strengths of both papers from an Austrian perspective, other than the papers certainly belie the claim by critics that ABCT has nothing to add to modern macro, are three.

  1. The papers argue recent empirical evidence, contra Freidman plucking, supports the Austrian view of a boom triggering a bust. Per Calvo, “There is a growing empirical literature purporting to show that financial crises are preceded by credit booms (Mendoza and Terrones (2008), Schularik and Taylor (2012), Agosin and Huaita (2012), Borio (2012)). Adding “This was a central theme in the Austrian School of Economics (see Hayek (2008), Mises (1952)).
  2. In a growing economy such as the 1920s and the 1990s and 2000s in the U.S., a monetary regime focusing on near term inflation, price, or even nominal GDP stability would still be subject to boom-bust cycles (Hayek and the 21st Century Boom-Bust and Recession-Recovery). Per Borio, A “major positive supply side developments, such as those associated with the globalisation of the real side of the economy, provide plenty of fuel for financial booms: they raise growth potential and hence the scope for credit and asset price booms while at the same time putting downward pressure on inflation, thereby constraining the room for monetary policy tightening.”
  3. Calvo and Borio recognize, as do Hayek, Mises, and modern Austrians (Rethinking Capital-Based Macroeconomics) that expansionary monetary policy during the recession phase may actually impede recovery and/or trigger renewed mis-directions of production setting the stage for a future more destructive bust a la the “unfinished” 2000 recession and the destructive 07-08 bust.

Major Weakness:

1. Both papers focus on a credit cycle not on created credit and thus fail to recognize the necessary role of central banking in turning small bubbles into big bubbles and economy-wide booms.

This focus on credit as a market phenomenon can lead …read more

Source: MISES INSTITUTE

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Sen. Paul Appears on Fox and Friends – August 30, 2013

August 30, 2013 in Politics & Elections

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Source: RAND PAUL

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Sen. Paul Appears on Fox's Hannity- August 29, 2013

August 30, 2013 in Politics & Elections

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Source: RAND PAUL

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Washington Times Op-Ed: It’s time to extend MLK’s dream to school choice aspirants and nonviolent offenders

August 30, 2013 in Politics & Elections

This week, we celebrate the 50th anniversary of the March on Washington and Martin Luther King Jr.’s ‘I Have a Dream’ speech. King’s speech ranks alongside The Declaration of Independence and Emancipation Proclamation as one of the most important expressions of American values and aspirations in our history. The marchers and activists of that era battled unspeakable odds to turn the nation’s eyes toward the plight of blacks in America. King reminded us then, and reminds us today, of the power of civil disobedience-in changing minds, changing hearts and ultimately, changing the law.
There will always be the laws of men. But King showed us that there is sometimes a higher calling, a duty to one’s nation and God that requires resisting conventional standards or laws. In his letter from a Birmingham jail, King wrote:
‘There is nothing new about this kind of civil disobedience. It was evidenced sublimely in the refusal of Shadrach, Meshach and Abednego to obey the laws of Nebuchadnezzar, on the ground that a higher moral law was at stake. It was practiced superbly by the early Christians, who were willing to face hungry lions and the excruciating pain of chopping blocks rather than submit to certain unjust laws of the Roman Empire. To a degree, academic freedom is a reality today because Socrates practiced civil disobedience. In our own nation, the Boston Tea Party represented a massive act of civil disobedience.’
Many in the political establishment considered King an ‘agitator,’ ‘rabble rouser’ and some even considered him akin to a terrorist. The government spied on him. Agents wiretapped his phone. We do not have to imagine what kind of treatment a figure like King would receive from a government that thought it could deny constitutional protections to its citizens, because he already lived it. Unfortunately, countless African-Americans of his generation lived it.
When one sees an injustice so great, he must make a choice-to continue tolerating the injustice or make sacrifices in the name of stopping it. Thankfully for us, King chose the path less traveled.
It is simply unimaginable to think of what kind of America we might be living in today if not for MLK’s courage and triumph.
King’s dream of racial equality has come a long way, but inequalities still exist that can’t be ignored. Too many Americans are trapped in a public education system that does not do our children justice. We …read more

Source: RAND PAUL

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CNN Op-Ed: Obama, don't rush into war in Syria

August 30, 2013 in Politics & Elections

The enemy of my enemy is not always my friend.
On one side we have al-Qaida; on the other side we have Syria’s authoritarian president Bashar al-Assad. On one side we have Islamic jihadists; on the other side we have Christians.
In all likelihood the Assad regime has used chemical weapons to kill civilians. And without a doubt Islamic rebels have kidnapped and killed priests and civilians.
It seems on all sides we have violence and chaos and it is unclear if any side will, in the end, be a friend of the United States.
The Constitution gave the power to declare war to Congress. One of our founding fathers, James Madison, specifically argued that the executive branch was most prone to war and for that reason the power to declare war was vested with the legislature.
If the debate were to come to Congress, two great ironies must be overcome:
1. The arms supplied to the Islamic rebels may well be used against Christians;
2. The Islamic rebels we aim to arm are allied with al-Qaida.
The war in Syria has no clear national security connection to the United States and victory by either side will not necessarily bring in to power people friendly to the United States.
The United States should condemn the use of chemical weapons. We should ascertain who used the weapons and we should have an open debate in Congress over whether the situation warrants U.S. involvement. The Constitution grants the power to declare war to Congress, not the President.
Recent statements by the Obama administration concerning the Assad regime’s alleged use of chemical weapons indicate that we may be on the precipice of war with Syria. Without adequate information and intelligence, military intervention in that nation’s civil war would be an unwise decision. Based on the knowledge of the situation that we do have, such action will assuredly be an unwise decision for the long-term interests and security of the United States.
Furthermore, our Constitution delegates war-making powers to Congress for an explicit reason – to provide a check on presidents who might make unwise or hasty decisions in foreign affairs. Syria is not an exception to this rule, but a good example of why the Constitution gives Congress the power to declare war and not the executive branch.
The unquestionable murkiness of the situation in Syria demands congressional debate …read more

Source: RAND PAUL

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Path toward Citizenship or Legalization

August 30, 2013 in Economics

By Alex Nowrasteh

Alex Nowrasteh

Controversy over a path toward citizenship is the most important roadblock to immigration reform.

Many conservatives oppose a path to citizenship because it’s unfair to reward law breakers with citizenship. Rep. Raul Labrador (R-Ida.) said, “People that came here illegally knowingly — I don’t think they should have a path to citizenship.” On the political left, Rep. Luis Gutiérrez (D-ll.) said he, “is opposed to proposals that bar citizenship or create a permanent non-citizen underclass.”

To Labrador’s point, the heavy fines, fees and bureaucratic abuses that would prod every legalized immigrant on a path toward citizenship are hardly an award for legal behavior. And to Gutierrez, a legalization status less than citizenship is no more an underclass than the millions of green card or visa holders that currently happily live without becoming citizens. 

There is a simple solution to this impasse that could satisfy both camps: Create two paths.

The first path should be toward a permanent work visa where the immigrant cannot apply for citizenship unless he or she serves in the armed forces or marries an American. This visa should be very cheap — hundreds of dollars — and granted quickly after national security, criminal, and health checks.

The second path should be toward a green card and eventual citizenship. This path should be more difficult and expensive, something similar to the Senate’s path to citizenship. Those legalized unauthorized immigrants who want to become citizens should be able to do so.

For unauthorized immigrants uninterested in citizenship, who just want to work and live in the U.S. without fear of deportation, a simple and low-cost path toward a permanent work permit would save them headaches, uncertainty, and cash.

This would definitely be consistent with conservatives like Labrador who say that unauthorized immigrants do not want citizenship. “They’re not clamoring for it,” he said earlier this year. “It’s only the activists here in Washington D.C. who keep clamoring for it.”

If Labrador is right, most unauthorized immigrants would choose a more affordable and easier path toward legalization rather than a more expensive and difficult path toward citizenship — if they were given a choice. 

A look at the polls, however, indicates that unauthorized immigrants do want citizenship. In fact, a recent Latino Decisions poll found that 87 percent want to become citizens. But if history is any guide, many of those respondents would choose a cheaper and easier form of legalization if it was offered.

The 1986 Reagan …read more

Source: OP-EDS

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The Never Ending Greek Tragedy

August 30, 2013 in Economics

By Dalibor Rohac

Dalibor Rohac

As fall draws nigh, Europe faces the Greek sovereign debt problem again. Both the German and Greek finance ministers, Wolfgang Schäuble and George Papaconstantinou, recently suggested that Greece might need yet another bailout to meet its financing needs.

This is disappointing for those who hoped that the deal agreed on in February last year, through which a significant haircut was imposed on bondholders, together with an injection of liquidity, was a lasting solution to the problem. However, in spite of the months of relative calm on the bond market and signs of timid recovery in the Eurozone, the recurrence of the problem is not surprising.

Greek debt problems have never gone away. Even after the restructuring last year, Greece has had the highest debt relative to the size of its economy in the Eurozone — 160.5 percent. And while the government is proudly running a primary surplus this year, 2013 is yet another annus horribilis for the Greek economy, which is expected to contract by 4 percent, thereby further increasing the relative size of the public debt.

Still worse, a contracting economy means that ordinary Greeks are getting poorer and poorer. The unemployment rate is at a staggering 27 percent, hitting young people, among whom the unemployment rate hovers above 64 percent, particularly hard. The full picture is even worse: out of 11 million Greeks, only 3.6 million are working. Since 2010, around 120 thousand professionals, including scientists and doctors, have left the country, and are unlikely to come back anytime soon.

The reason why the Greek economy is in such terrible shape has to do with the fact that the fiscal consolidation undertaken by the government of Prime Minister Antonis Samaras has been shambolic. Earlier this year, Greeks have increased the rate of their corporate income tax from 20 to 26 percent, and added new top rate of 42 percent rate on annual personal incomes above €42,000.

By relying heavily on increasing revenue, the government is effectively imposing a part of the burden of adjustment on the private sector. Moreover, evidence from other attempts at fiscal consolidation shows that adjustments that rely on revenue increases as opposed to spending cuts tend to be less durable and less effective.

Since 2009, government revenue as a proportion of GDP has increased from around 38 to 43 percent. While spending has declined, both in absolute and relative terms, the government has done very little to reduce the bloated public …read more

Source: OP-EDS

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How Do You Like Your Central Planners, Bookish or Flamboyant?

August 30, 2013 in Economics

By Peter G. Klein

“Do we really want a system in which one person’s personality type has such a huge effect on the global economy,” I asked in a critique of the Fed. Today’s Economist vividly illustrates my point, in making the case for Yellen over Summers:

Both Ms. Yellen and Mr. Summers are “doves,” rightly worrying more about economic weakness than any threat from inflation, but it is clearer how Ms Yellen would go about putting her views into practice. As the Fed’s vice-chairman she has pushed the current set of unconventional policies, from bond-buying to “forward guidance”. Under her leadership the central bank would influence market expectations with even more detail around its future plans. Her public demeanor would be much like Mr Bernanke’s: technocratic and based on meticulous command of the data. Her cautious, consensus-building approach would minimize surprises (and financial-market volatility) as the current chairman has.

Mr. Summers has a less clearly articulated approach to monetary policy and more political baggage. He has said little in public about how central banks can best support economies when short-term rates are at zero. Judging by his record in other areas, he is likely to push for creative solutions but to prefer not to have the Fed’s hands tied by promises about its future direction. The chances are that a Summers Fed would be even bolder, but less predictable, than the Bernanke Fed. Mr Summers’s dazzling intellect would make for bravura public performances, but he would be more likely to unsettle the markets with unscripted comments and to alienate both other Fed governors and lawmakers.

I knew Yellen in grad school and have encountered Summers in person, and I agree fully with these characterizations. But the Economist’s editorialist misses entirely the bizarre, indeed grotesque, context of this discussion. The Fed is the world’s most powerful government economic planning organization and its decisions affect the lives and prosperity of millions, if not billions. All this will hinge on the personality of one person? How about a system in which authority is decentralized, power is limited, and nobody cares who calls himself “Fed Chair”?

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Source: MISES INSTITUTE

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New Joseph Salerno Shirt in the Store

August 29, 2013 in Economics

By Mises Updates

M320

Whether he’s testifying in Congress, editing the Quarterly Journal of Austrian Economics, or heading up the Mises Institute’s many academic programs, Joseph Salerno is there to supply some intellectual heavy lifting when you need it most.

With this handsome gray t-shirt, now available  in the Mises store, you can signal that you’re a serious student of Austrian economics, and that you know the purchase of this shirt will be no malinvestment.

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Source: MISES INSTITUTE