You are browsing the archive for 2013 November 17.

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Update of Austrian measures of the money supply

November 17, 2013 in Economics

By Mark Thornton

For Austrian economists doing economics is not about measuring things. However, it still can be useful to gauge the economic environment, whether that is the near term or long ago. Michael Pollaro here provide such an update of the money supply from over at Forbes. According to Pollaro:

TMS2, which represents our broadest and preferred U.S. money supply aggregate, posted a year-over-year rate of growth of 8.4% in October up from 8.1% in September. While still a robust rate, the U.S. monetary inflation rate is now substantially off its highs and in a decelerating trend. This is something not to be taken lightly. Indeed, as we discussed here, given the size of this our current monetary largesse, any substantive deceleration in the rate of monetary inflation from here ushers in the real possibility of another financial and economic bust, and a monumental one at that.

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Source: MISES INSTITUTE

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Economics at Troy University

November 17, 2013 in Economics

By Mark Thornton

Many young people want to know what has caused this ongoing economic crisis and many are looking for places to study Austrian free market economics. One University that is often overlooked is Troy University. Its faculty contain several free market economists who are sympathetic to the Austrian School of economics including former Mises Summer Fellows Dr. G. P. Manish and Dr. Malavika Nair. Troy University is located in Troy, Alabama not far from the Mises Institute.

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Source: MISES INSTITUTE

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A Nation That Has Forgotten about Competing

November 17, 2013 in Economics

By Swaminathan S. Anklesaria Aiyar

Swaminathan S. Anklesaria Aiyar

Back in 1991, India was the world’s greatest aid recipient, a patently uncompetitive giant begging for alms. Economic reforms from 1991 onwards gradually made India highly competitive, enabled it to touch 9% GDP growth, and to be called a potential superpower.

Those days are gone. GDP growth has halved to 4.5%. India has become uncompetitive in several ways. Worse, the Indian political class has stopped even trying to compete globally. It focuses on subsidies, reservations and special measures for sundry vote banks, regardless of the implications for competitiveness. This will ultimately lead to bankruptcy, not inclusive growth (as claimed by Congress spin-masters).

India has a deep structural problem that is not even recognized, let alone redressed.”

When India went bust in 1991, drastic measures over several years were needed to restore competitiveness. The rupee was devalued hugely, industrial licensing and MRTP clearance were abolished, trade was liberalized, import duties were gradually slashed from 300% to around 10% by 2005. Public sector monopolies like telecom and oil refining were opened up to the private sector, enabling the creation of the world’s fastest growing and cheapest telecom service, and the world’s biggest export-oriented refineries. Liberal foreign investment converted India into a global small car hub, Many multinationals like GE came in and made India an R&D hub. A liberalized private sector created the software/BPO revolution.

Merchandise exports rose from 5% of GDP to 15%. Service exports rose even faster, and India became a world leader in software. The rupee strengthened from Rs 50 per dollar in 2002 to Rs 40 per dollar by 2008. India’s rising competitiveness made it a potential superpower. That’s suddenly gone. In the last three years, GDP growth has plummeted, industry and exports have stagnated, the current account deficit has widened dramatically, and the rupee has crashed. A year ago this finally persuaded the government to embark on some reforms, but these have failed to revive the old dynamism.

Why? Because the new measures do not change the political mind-set of constantly ignoring competitiveness in formulating new policies and regulations. Politicians take competitiveness for granted, and just want to divide up the spoils of growth. Alas, neglect of competitiveness has meant a collapse of growth, and hence of the spoils too.

In his 1997 “dream budget”, Chidambaram declared India would steadily reduce its import duties to ASEAN levels. This aimed to make India competitive with …read more

Source: OP-EDS

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Immigration Reform Is Delayed, Not Defeated

November 17, 2013 in Economics

By Alex Nowrasteh

Alex Nowrasteh

On Wednesday, Speaker John Boehner (R-OH) confirmed that immigration reform would not happen in 2013. “We have no intention of ever going to conference on the Senate bill,” he told reporters. That certainly sounds final, but immigration reform is still alive and possible in 2014.

Sure, there are political naysayers who say reform in an election year is impossible. Take Congressman Mario Diaz-Balart (R-FL), a reform supporter, who recently said: “[N]ext year, you start running into the election cycle. If we cannot get it done by early next year, then it’s clearly dead. It flat lines.”

If Congress was able to pass immigration reform during the election years of 1986 and 1990, it can do it again in 2014.”

No offense to Congressman Diaz-Balart, but he may want to take a look back at history, because the last major immigration reforms were passed during election years, and it can happen again.

The Immigration Act of 1990 is the best example. The Senate passed the reform bill in July of 1989, but the House didn’t act until more than a year later. A final bill was passed approximately one week before the midterm elections.

The Immigration Reform and Control Act (IRCA) of 1986, also known as the Reagan amnesty, is another reason to be optimistic about reform in 2014: it became law mere weeks before that year’s mid-term elections. Like the 1990 version, it wasn’t all smooth sailing. The law was originally passed in late 1985, but the conference committee took a year to rework parts of the bill before Congress finally passed it.

If Congress was able to pass immigration reform during the election years of 1986 and 1990, it can do it again in 2014.

Granted, it could be argued that today’s political environment is far more contentious than in the late 1980s, but there are two major factors that could push the Republican House of Representatives to pass immigration reform in 2014.

The first is ideology. Republicans claim to support free-markets and oppose government control of the economy. Free-markets require mobility of workers that can move to economic opportunities, but government immigration regulations hinder that. Workers are a huge part of our economy and immigration reform will, to a small but important degree, free up that market to our economy’s benefit.

The second, and arguably more potent, factor is political self-interest. The political tide is turning toward immigration reform, and …read more

Source: OP-EDS

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Obamacare Damaged the Nation's System, Some Dems Don't Mind

November 17, 2013 in Economics

By Michael D. Tanner

Michael D. Tanner

At the end of the children’s nursery rhyme, “all the king’s horses and all the king’s men, couldn’t put Humpty Dumpty together again.”

That’s the lesson Americans should bear in mind as we witness the implosion of ObamaCare — sometimes, once something is broken, no amount of effort can fix it.

The failure of ObamaCare may be opening the door to even greater government control of our health-care system.”

President Obama has now admitted his promise that “if you like your health-care plan, you’ll be able to keep your health-care plan, period” — a promise he made at least 23 times — ended up “not being accurate.”

But this was not another “glitch” in the ObamaCare rollout, like healthcare.gov. It was a key feature of the law. ObamaCare is built around the idea of forcing the young and healthy to overpay for insurance in order to subsidize the old and sick. That is the reason why the law includes the infamous individual mandate, requiring all Americans to have insurance.

If the government is going to require you to buy insurance, it must define what is and is not insurance. To satisfy the mandate, insurance has to meet certain government-defined standards. This is only logical. If young and healthy people could buy less-comprehensive plans than the older and sicker people, it would defeat the whole purpose of the mandate.

As of this week roughly 4.8 million individual insurance plans have been cancelled because they didn’t meet ObamaCare’s exacting standards, such as providing as maternity care (even if you were a man), alcohol rehabilitation or contraceptives. Another 5 million are expected to lose their coverage.

Few ObamaCare supporters truly mourned these cancellations. After all, they believed that those plans were, in the president’s words “subpar.” The people who bought these plans just didn’t know what was good for them.

The people, however, disagreed.

In response to the public outcry, Obama offered a temporary “fix.” People with noncompliant plans will be able top keep their policies for one more year, but only if insurance companies choose to do so, and state insurance commissioners go along. And while insurers could renew existing plans, even if they don’t meet ObamaCare requirements, they still cannot sell those policies to anyone new.

The problem is that insurance plans are not simply a list of benefits on a piece of paper. They are a complex interrelationship of benefits, the pool …read more

Source: OP-EDS