You are browsing the archive for 2013 September 02.

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Mark Thornton Discusses Inflation and Austrian Economics

September 2, 2013 in Economics

By Mises Updates

Last Monday, Mark Thornton discussed inflation with Alan Butler of Butler on Business. Click here for the full radio interview.

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Source: MISES INSTITUTE

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A Carbon Tax Would Make No Sense

September 2, 2013 in Economics

By Richard W. Rahn

Richard W. Rahn

All too many bad ideas get endlessly recycled — the carbon tax is one of them. A carbon tax could be a tax on coal, oil and gas carbon-dioxide emissions from power plants and other sources. Do you know how much carbon dioxide is in the atmosphere? It is a little less than 400 parts per million. Do you know what the optimum level of carbon dioxide is? No one does, even though some have the extreme conceit to think they do.

The earth’s atmosphere is 78 percent nitrogen, about 21 percent oxygen, less than 1 percent argon, and only 0.038 percent carbon dioxide — plus a variable amount of water vapor. The gas is necessary for life. Plants cannot grow without it. They absorb it and release oxygen in exchange. Animals exhale carbon dioxide and inhale oxygen. There is evidence that as carbon-dioxide levels have risen, plants are growing faster, which means cheaper food.

Attempting to regulate carbon dioxide is folly.”

The advocates of a carbon tax claim that the tax will help reduce dangerous emissions. The argument is that carbon dioxide is a “greenhouse” gas and, everything else being equal, more of it in the atmosphere will result in higher atmospheric temperatures. The operative phrase here is “everything else being equal.” When fossil fuels are burned, they produce small amounts of carbon dioxide but large amounts of water vapor. Increases in water vapor show up as more cloud cover. Clouds both trap heat (which increases warming) and reflect sunlight (which reduces warming), but there is no consensus about which effect is greater.

What is known with a high degree of certainty is that at times in the past, the Earth has been both warmer and cooler at current levels of carbon dioxide in the atmosphere. What is also known is the current climate models have a dreadful record of prediction. Twenty years ago, we were told that the Earth’s temperatures would steadily rise from then on, yet there has been no average warming for the past 16 years — oops.

Let’s assume for the moment that those who think that global warming is largely caused by increases in carbon dioxide, and that man has caused the increase, are correct. Those who think that also have a “mainstream” forecast of 3 degrees Celsius of global warming between now and the end of the century. At …read more

Source: OP-EDS

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John Kerry Can't See It, but Congress May Vote 'No' on Syria

September 2, 2013 in Economics

By Gene Healy

Gene Healy

On Saturday, President Obama announced that — this once — he’ll do what the Constitution commands. It doesn’t seem appropriate to praise him for that, but our standards have fallen so low that we’re now actually surprised when a president seeks congressional authorization before waging war.

Surprised — and, in some cases, outraged. “Weakest president since James Buchanan,” former Ambassador John Bolton fumed on Fox News: “Astounding! … a very foolish thing.

Rep. Peter King, R-N.Y., was downright insulted that Obama bothered to ask for congressional imprimatur: “The president doesn’t need 535 Members of Congress to enforce his own redline.”

The Constitution’s architect, James Madison, believed that “in no part of the constitution is more wisdom to be found, than in the clause which confides the question of war or peace to the legislature” — but what did he know? Modern practice has been to let the Tomahawks fly, Congress be damned.

Asking for a vote makes it a lot harder to ignore the results.”

The closest precedent to what the administration proposes in Syria is 1999’s air war over Kosovo, during which President Clinton ignored two congressional votes denying authorization, and became the first president to wage an illegal war beyond the War Powers Resolution’s 60-day time limit (with Libya in 2011, Obama became the second).

On April 28, 1999, the House voted no on declaring war 427-2, and no on authorizing the president to continue airstrikes against Serbia, 213-213. “The House is obviously struggling to find its voice,” Clinton’s National Security Council spokesman explained, “so we sort of just blew by” the House votes.

Clinton never wanted a vote; in contrast, on Saturday, Obama demanded that legislators stand and be counted: “All of us should be accountable… and that can only be accomplished with a vote.”

The growth of the Imperial Presidency, Arthur Schlesinger Jr. observed in his classic 1973 book on the subject, has been “as much a matter of congressional abdication as of presidential usurpation,” as legislators have ceded vast authority to the executive branch.

That’s a danger here in the Syria debate as well: The draft Authorization for Use of Military Force the White House released Saturday is appallingly broad.

There’s no “sunset clause,” and ground troops aren’t ruled out. It neither limits the president to striking Syrian forces, nor bans strikes outside Syria — it’s loose enough, as Harvard’s Jack Goldsmith points out, to allow the president …read more

Source: OP-EDS

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Two New Books from Hunter Lewis

September 2, 2013 in Economics

By Mises Updates

cronycap

Hunter Lewis, co-founder of global investment firm Cambridge Associates, Circle Bastiat blogger, and co-founder of AgainstCronyCapitalism.org, has two new books out this week: Free Prices Now! and Crony Capitalism in America, 2008-2012. 

According to the press kit:

Free Prices Now! begins by asking why the human race is still so poor. How can it be that billions still lack even enough to eat? It then provides the answer. A prosperous society is a cooperative society. Cooperation in turn depends on trust. And trust requires honesty.

The most reliable barometer of economic honesty is to be found in prices. Honest prices, neither manipulated nor controlled, provide both investors and consumers with reliable economic signals. They are the foundation for a successful economy.

A corrupt economic system does not want honest prices, honest information, or honest results. The truth may be unprofitable for powerful government leaders, private interests allied with them, or economic “experts” whose careers have been devoted to price manipulations and controls.

The US Federal Reserve and other central banks have created a system of “liar loans” and false prices. Other parts of government have contributed as well. In effect, the regulators on whom we depend have become dis-regulators.

Can it really be this simple, that economic prosperity and job growth depend on allowing economic prices to tell the truth, free from the self-dealing and self-interested theories of powerful special interests?

Y es.

And on Crony Capitalism in America: 

When private interests need a political favor, they know whom to call. When politicians need money, they also know whom to call. The people involved try to keep most of it concealed behind closed doors.

This is the system that prevails in Russia after the fall of Communism. But increasingly it is America’s system as well.

Many people regard Wall Street as the epicenter of American capitalism. In reality it is the epicenter of American crony capitalism. Where Wall Street stops and Washington begins is impossible to say. This situation was not caused, as many suppose, by the Crash of 2008. Rather the Crash was caused by the longstanding Wall Street-Washington partnership. But the problem extends far beyond Wall Street to every corner of America.

If we are going to do anything about our present economic problems, and also give the poor a chance at a better life, we will need to eliminate crony capitalism and restore an honest economy.

Although full of hair-raising stories, this book is also about …read more

Source: MISES INSTITUTE

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Mises Fellow McCaffrey awarded PhD in Economics

September 2, 2013 in Economics

By Mises Updates

mccaffrey

Former Mises Fellow Matthew McCaffrey (video archive here) received his PhD in Economics at the University of Angers, France, on August 29. McCaffrey’s dissertation adviser was Mises Institute Senior Fellow Guido Hülsmann.

Pictured here from left to right are Bertrand Lemennicier, Pierre Garello, McCaffrey, Mises Institute Associated Scholar Philipp Bagus, and Hülsmann.

See also McCaffrey’s review of  Ekelund-Price’s The Economics of Edwin Chadwick: Incentives Matter in the Summer 2013 edition of the Quarterly Journal of Austrian Economics. 

(Mises Institute scholars and alumni are encouraged to send their news to updates@mises.org)

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Source: MISES INSTITUTE

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DiLorenzo’s Mises Academy Class Begins in One Week

September 2, 2013 in Economics

By Mises Updates

6520

Tom DiLorenzo’s Mises Daily article today, “The Virus of Imperialism,” covers American imperialism up through the close of the nineteenth century.

The impulse to conquer has been there from the beginning, Writes Prof. DiLorenzo:

One of the congressional leaders of the early nineteenth-century war party, Henry Clay [hoping to invade and conquer Canada], celebrated the declaration of war against Great Britain on June 4, 1812, by declaring that “Every patriot bosom must throb with anxious solicitude for the result. Every patriot arm will assist in making that result conducive to the glory of our beloved country”

Students enrolling in the five-week course “Imperialism and Anti-Imperialism” at Mises Academy will take a detailed look at the nineteenth century’s numerous wars of choice, as well as those of the twentieth century and beyond.

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Source: MISES INSTITUTE

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How Mischievous Obama Administration Officials Scuttled an Important Supreme Court Case

September 2, 2013 in Economics

By Trevor Burrus

Trevor Burrus

How would you feel if you knew the federal government was making secret deals to keep cases harmful to its agenda out of the Supreme Court? Well, it has been.

At the center of this saga are two cases involving St. Paul, Minnesota. One case, Magner v. Gallagher, sat on last term’s Supreme Court docket, the city having brought it to the Court to ask the justices to overrule a darling policy of the Obama administration. The other case was a potential lawsuit against St. Paul that the federal government was considering supporting. A deal was struck where the city would drop their Supreme Court appeal in exchange for the federal government not supporting the lawsuit against the city.

That, at least, was the finding of a report from the House Committee on Oversight and Government Reform. The report described the backroom deal as harming “the rule of law in the United States and the reputation of the Department of Justice as a fair and impartial arbiter of justice.”

To understand the nuances of the story we must first understand why Magner was a potentially landmark case that could have radically changed the administration’s housing policies, as well as its prosecution of big banks for non-intentional, statistical discrimination, the so-called “disparate impact” theory of discrimination.

Disparate impact occurs when a neutral policy, such as using credit scores to determine interest rates, has a disproportionate impact on minorities. No intentional discrimination is alleged, but when a company faces a charge of disparate impact, the burden shifts to it to show that the policy is justified. In reality, demonstrating this is very difficult, and companies often settle to avoid drawn-out litigation.

The Obama administration is a big fan of disparate impact theory. They’ve used it to extract large settlements from big banks, and they even created an entire unit in the Justice Department to pursue claims.

Yet it is not clear that the language of the Fair Housing Act (FHA) allows for disparate impact claims. Although nearly every court of appeals has held that it does, the Supreme Court has not yet weighed-in directly on the issue.

Magner v. Gallagher was the case that would have answered that question, and the administration feared that a majority of justices would confine the law’s prohibitions to intentional, not incidental, discrimination.

Thus a secret deal was struck, and the official doing the dealing was none other …read more

Source: OP-EDS

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Cachanosky’s List of ABCT in Mainstream

September 2, 2013 in Economics

By John P. Cochran

It’s wonkish, but it will be of interest to those doing research on ABCT or capital-structure based macro.

My replacement at Metro State, Nicolas Cachanosky, has compiled a list of papers by non-Austrians that refer to ABCT most often favorably. See: The ABCT making its presence in the maintream literature

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Source: MISES INSTITUTE

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Prohibition Spawned Mexico’s Oldest Drug Cartel

September 2, 2013 in Blogs

By Political Zach Foster

Hey everyone! Recently IVN News published my recent piece about the current Mexican drug war and its roots in American alcohol Prohibition. It’s quite simply titled “Prohibition Spawned Mexico’s Oldest Drug Cartel” and is a little shorter than my usual pieces.
While Al Capone grew wealthy in the Midwest and Enoch Johnson ruled his boardwalk empire in the Northeast, other entrepreneurs were busy elsewhere. Juan N. Guerra, a Mexican national from Matamoros, entered the bootlegging business in 1929 and quickly took control of all liquor moving across the Rio Grande into South Texas.

Like many drug lords in the mid-twentieth century, “Don Juan” Guerra filled the patronage void which grew as elderly warlords from the Mexican Revolution passed away…

Read the full article here!
* * *
Photo courtesy of AP Mexico. I’m thinking of writing a book-length essay on the Mexican drug war, which is just as much a civil war as it is a drug war. After all, when the government troops and narco-guerrillas are of the same nationality… Anyway, comment if you’d be interested in reading it.

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Source: ZACH FOSTER RANTS