You are browsing the archive for 2013 December.

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Shirking Its Duty

December 31, 2013 in Economics

By Doug Bandow

Doug Bandow

A second marriage, it is said, is the triumph of hope over experience. So is a European Union debate over defense. It is Kabuki theater, an enthralling show without practical impact. The Europeans recently issued new promises to do more than free ride on the U.S. However, if they really want to make a difference, they must devote real resources to their militaries and to take real risks in deploying their forces — which no one expects.

In late December European leaders assembled in Brussels for the latest European Council meeting. (Don’t worry if you’re confused: there’s also a commission and parliament; they all do very important things, even though it’s hard to figure out what!) It was the first Council meeting in eight years focused on defense since the Europeans have no one to defend against. It’s been five years since the body offered more than a pro forma mention of the issue.

The continent is made up of frustrated wannabe global powers. However, only France and Great Britain possess both the resources and desire to affect world events. Germany has the former, but remains burdened by history. Italy is reasonably wealthy, but the last time the Italians successfully married economic and military strength was the Roman Empire.

The Europeans proved to be mostly feckless even during the Cold War with the Red Army poised in the east. Rather than build up their own forces, they preferred to rely on America. European governments would routinely promise to spend more, and then welsh on their commitments. After all, they knew Uncle Sam would take up the slack.

Since the end of the Cold War it’s gotten far worse. It was hard enough to get the Europeans to divert cash from their generous welfare states when there was a plausible enemy. But today? The Soviet Union is gone, replaced by the unpleasant but much weaker and less ambitious Russian Republic. The Warsaw Pact is gone and its members have joined NATO.

Europe still wants U.S. to be its military.”

Since then the transatlantic alliance’s desperate search for new enemies has led to the Bosnian Serbs, Serbia, the Taliban, and Libya. Britain and France unsuccessfully attempted to add the Syrians, and Paris wandered off unilaterally to fight in Mali and the Central African Republic. But it’s hard to convince people that they shouldn’t plan on retiring at 50 (or is it …read more

Source: OP-EDS

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11 Good Things for Liberty in 2013

December 31, 2013 in Economics

By Mises Updates

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by Llewellyn H. Rockwell, Jr.

As 2013 draws to a close, let’s pause to recall some important developments for the cause of liberty – some of which you already know well, and others you’ll be hearing about for the first time.

Edward Snowden. After sitting on the Bush-era warrantless wiretapping story for 18 months, the New York Times revealed a portion of the surveillance activities of the US government in 2005. Thanks to Edward Snowden, we now know that the National Security Agency’s spying activities vastly exceeded anything we heard about in the media.

The Snowden revelations served two functions from the point of view of public enlightenment. First, the regime in DC was once again exposed as untruthful, even sinister. But second, the bipartisan condemnation of Snowden on the part of the political establishment – both Nancy Pelosi and John McCain denounced him, unsurprisingly – reminds us that there is, after all, one party: the state party. Whatever cosmetic differences separate politicians otherwise, when push comes to shove, they rally to one another in the face of a truth-teller.

New President for the Mises Institute. At the end of 2013 the Mises Institute named Jeff Deist, former as chief of staff to Ron Paul, as its new president. Jeff is a significant  figure in so many ways – smart, well spoken, principled, and knowledgeable about money, banking, the Fed, and indeed the entire edifice of Austrian economics.

“Ron Paul’s congressional staff viewed the Mises Institute as our intellectual home,” Jeff recalls. “We applied Austrian principles and scholarship to virtually everything Ron did as a member of Congress. I’m honored to join an organization Ron has enthusiastically supported from the very beginning, and excited about dedicating myself to furthering the Austrian message.”

Ron, for his part, says he’s thrilled that Jeff “is fighting for liberty again.”

Obamacare. Everybody knows about the Obamacare fiascoes – the useless website and “if you like your plan, you can keep it” chief among them. But what a disaster the rollout of this program has been for the regime, which hates nothing more than looking ridiculous and incompetent, and being the butt of the people’s jokes. Meanwhile, supporters of the president think they’re helping matters by casually pointing out that of course the president knew he was lying when he said people could keep health plans they liked; he had to lie to them in order to get this program passed.

It’s rare to encounter such refreshing candor from the political and …read more

Source: MISES INSTITUTE

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New German-Language Book on Monetary Policy

December 31, 2013 in Economics

By Mises Updates

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Philipp Bagus and Andreas Marquart have co-authored a new introductory text on monetary policy for German-language readers.

Here’s a brief description:

In Warum anderen auf Ihre Kosten immer reicher werden – und welche Rolle Staat und Papiergield dabei spielen (transl. Why You Pay For Others to Get Richer – And What the Government and Paper Money Have to do with It) A. Marquart and P. Bagus offer an introduction to the perverse consequences of our present fiat money system directed toward a popular audience. Throughout the book Marquart and Bagus compare good or private money and a society based on it with society based on bad or state money. They explain how money arises on the free market and how and why governments got involved into the monetary system. They show how business cycles distort the economy, how the government and the financial sector benefit from the current monetary system, how the fiat money system allows for an unjust redistribution impoverishing the middle and lower classes benefiting the super rich, how regulations interact with the monetary system to strangulate the economy, and how fiat money destroys traditional values and the family.

…read more

Source: MISES INSTITUTE

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Advancing Pharmaceutical and Medical Technology Does Not Depend on Patents

December 31, 2013 in Economics

By Mises Updates

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Writes Nathan Nicolaisen in today’s Mises Daily:

The notion that unpatented medical technologies are not feasible is historically false. Surveys of important medical breakthroughs provide insight into whether patents are absolutely necessary and conducive to innovation in medicine. In 2006, the British Medical Journal challenged its readership to submit a list of the most noteworthy medical and pharmaceutical inventions throughout history. The original list contained over 70 different discoveries before being narrowed down to 15. The list goes as follows in no particular order: penicillin, x-rays, tissue culture, ether anesthetic, chlorpromazine, public sanitation, germ theory, evidence-based medicine, vaccines, the pill, computers, oral rehydration therapy, DNA structure, monoclonal antibody technology, and smoking health risk. Of these discoveries, only two of them have remotely anything to do with patents, chlorpromazine and the pill. In another survey conducted by the United States Centers for Disease Control the results are strikingly similar. Of the ten most important medical discoveries of the twentieth century, none of them had anything to do with patents.

…read more

Source: MISES INSTITUTE

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The Five Worst Op-Eds of 2013

December 31, 2013 in Economics

By Gene Healy

Gene Healy

Picking the year’s worst op-eds — an annual tradition in this space — wasn’t easy in 2013. There’s the Slate writer who announced you’re “a bad person if you send your children to private school”; the New York Times piece arguing that conservative Dallas “willed the death” of JFK (by getting a communist to shoot him?); and the fellow who worried that allowing more high-skilled immigration would exacerbate “America’s Genius Glut.”

If you’ve been losing sleep over the genius glut in American punditry, rest easy. That threat’s a long way off.

To narrow the choices and give this pudding a theme, I’ve decided that 2013’s malicious listicle will focus on the perverse affinity for executive power of our alleged “Thought Leaders.” In a year when presidential incompetence and power lust ruled the headlines — when record numbers of Americans feared big government — the leading lights of the American commentariat clamored for more presidential power. Go figure.

5. Amitai Etzioni, “Why It Should Be Harder to Impeach a President,” The Atlantic (May 16)

Early on in President Obama’s summer of scandal eruptions, communitarian honcho Amitai Etzioni was incensed that anyone dared invoke the I-word. After all, the president likely “did not know diddly squat” about IRS harassment of the Tea Party.

Only a constitutional amendment making it harder for Congress to impeach the president could save us, Etzioni insisted. But since we manage fewer than one presidential impeachment per century, how much harder could it be?

4. Maureen Dowd, “Barry’s War Within,” the New York Times (Sept. 7)

MoDo routinely uses her space at the Times to work through her daddy issues: Why can’t President Obama be “the strong father who protects the home” instead of an aloof “professorial president”?

In this column, Dowd’s father figure disappoints her once again. Instead of “hurl[ing] a few missiles, Zeus like,” at Syria, Obama had been contemptibly weak: “When it came time to act as commander in chief, he choked,” reverting to “Barry, president of the Harvard Law Review.” Apparently, only a legalistic sissy would ask Congress to authorize a war.

3. Norman Podhoretz, “Obama’s Successful Foreign Failure,” Wall Street Journal (Sept. 8)

But Obama only looks weak, according to neoconservative godfather Norman Podhoretz. Going to Congress was part of his sinister Kenyalinskyite plan to destroy US hegemony. Even when he golfs, he’s hellbent on the “erosion of American power.”

2. …read more

Source: OP-EDS

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New Year's Resolutions for Others

December 31, 2013 in Economics

By Richard W. Rahn

Richard W. Rahn

New Year’s resolutions are difficult to keep. That is why I find it easier to make them for others, rather than myself, as part of my other-people improvement program. The country would not be on the road to ruin if those in government would follow the New Year’s resolutions I propose for them, starting with President Obama (as part of my fantasy world).

As is well known, the president has difficulty telling the truth, which, as most children learn at an early age, can lead to many troubles. If the president had always spoken “the whole truth and nothing but the truth,” he would have been unable to engage in the destructive economic, foreign and health care policies that have caused him and the nation so many problems. Just think about the mess we would have avoided if the president had said three years ago, “When Congress votes for my proposed Obamacare, you are likely to lose your doctor, the current insurance plan that you like, and, by the way, it will cost young, healthy people many times as much as they are now paying.”

Because it is difficult for many people such as the president to always tell the truth, he should be given a support group in the form of a review committee of distinguished, senior, nonpartisan, well-known truth tellers to approve every written statement and speech that the president makes. Without their signoff, he would not be allowed to say anything — or have anything come out in written form under his name. (This would have the side benefit of causing the president to say far less.)

A tweak here, a tweak there, starting with the truth.”

Members of Congress should resolve to not vote for anything they have not fully read and understood. Again, many of those in Congress may have a problem adhering to this resolution without external discipline. Therefore, before each vote, every member of Congress should have to swear on a Bible, or on the Constitution, on YouTube that they fully understand what they are voting on. One would have thought the embarrassment of having voted for Obamacare without having a clue of what was in it would be sufficient to alter the behavior of members of the House and Senate — but too many continue to stick with the bad old ways that make them look silly and …read more

Source: OP-EDS

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Hayek’s Rule and the Productivity Norm

December 30, 2013 in Economics

By John P. Cochran

My replacement at Metro State, Nicolas Cachanosky, continues to write interesting, challenging papers in the Austrian tradition faster than those of us used to the slower pace of retirement can read them. His most recent is “Hayek’s Rule, NGDP Targeting, and the Productivity Norm: Theory and Application.” Cachanosky notes:

The 2008 crisis demonstrated that serious economic imbalances can take place even in the absence of inflationary problems. An important consensus regards monetary policy that kept interest rates too low for too long as a major driver of the financial crisis (Borio & Disyatat, 2011; Diamond & Rajan, 2009a; Hume & Sentance, 2009; Lal, 2010; Leijonhufvud, 2009; Meltzer, 2009; O’Driscoll, 2009; Schwartz, 2009; Taylor, 2009; White, 2008; Young, 2012). The absence of inflation introduces the question of whether price level stability is in fact a good guide to monetary policy.

I have argued elsewhere (Hayek and the 21st Century Boom-Bust and Recession-Recovery) this lesson should have been learned from the dot.com bust:

The first boom-bust of the period, 1995–2000, should have provided evidence that Hayek was premature in de-emphasizing the empirical importance of distortions in the structure of production caused by money and credit creation in a growing economy with relatively stable prices (Cochran, Yetter, and Glahe, 2004, pp. 13–14). A monetary shock which accommodated a produc­tivity shock generated a significant boom as exhibited by real GDP above potential GDP (see figure 1). The resulting malinvestment during this period and its effect on employment are illustrated in figures 2 and 3. The resulting “bust,” at least measured in terms of the cycle impact on GDP, was relatively mild.

The significance of this cycle for the role of monetary policy was perhaps missed because it occurred at the end of the relatively long period of growth and stability known as the “Great Moderation.” This period was a time of better—at least compared to monetary policy of the 1960s and 1970s—but not necessarily good policy (Garrison, 2009). During this period, central banks were heavily influenced by macroeconomic events of the 1970s which seemed to discredit the prevailing neo-classical synthesis/Keynesian consensus. A vast economic literature from the consequent policy effectiveness debate emphasized central bank policies that—at least in the long run—aimed at price stabilization as a dominant policy goal. The Fed, while not explicitly inflation targeting, followed a policy that mimicked a Taylor Rule policy. Garrison (2009) characterizes this as a “learning by doing policy” which …read more

Source: MISES INSTITUTE

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Mark Thornton Speaking Tonight in Orlando

December 30, 2013 in Economics

By Mises Updates

Tonight from 7 pm to 8:30 pm in Orlando, Florida: Mises Senior Fellow Mark Thornton is back in Orlando and will be speaking on “Living in Bernanke’s World of Bubbles.”

Click here for full event information. 

…read more

Source: MISES INSTITUTE

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Don’t Fear Deflation; Fear Central Banks

December 30, 2013 in Economics

By John P. Cochran

The always interesting and informative Richard Ebeling is doing regular commentary at EPICTiMES. His most recent is “Don’t fear Deflation, Unless Caused by Government.” Here Ebeling effectively refutes arguments made by Bernanke and Yellen that the Fed’s massive monetary base expansion was necessary to fight recession and prevent deflation.

Highlights:

Rather than assisting a post-recession recovery, these policies – plus other market-harming government interventions, regulations, and manipulations including ObamaCare – have made this the most sluggish recovery, especially in terms of employment, in the entire period since the end of World War II in 1945.

And

A free, competitive market economy is always rewarding successful entrepreneurs with profits for having made new, better and less expensive goods to earn consumer business. Thus, the normal trend in a free, competitive market is a world of gently falling prices as innovative businessmen bring improved and less expensive goods to consumers.

A truly free market economy, therefore, is one that tends to have the “good deflation,” and we should look forward to it, if only government intervention and central banking would get out of the way.

An archive of Ebeling’s contributions can be accessed here and is well worth bookmarking.

For the best available presentation of the Austrian view of deflation see Joe Salerno’s An Austrian Taxonomy of Deflation—With Applications to the U.S.. Also useful is pp. 37-40 in Salerno’s A Reformulation of Austrian Business Cycle Theory in Light of the Financial Crisis.

…read more

Source: MISES INSTITUTE

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Audio: Walter Block Explains Austrian Economics

December 30, 2013 in Economics

By Mises Updates

This interview with Walter Block is a little old (May 2013), but we haven’t linked to it before.

Some highlights of the interview include:

  • Block contrasts Austrian economists as philosophers compared to “normative” economists which he characterizes as ethicists and empiricists.
  • He highlights praxeology, the study of human interactions, as a central tenet of the Austrian school.
  • He emphasizes that there are areas where libertarians and Austrian economists do not have overlapping thinking.
  • Block says there is inflation at present, just not in what the official statistics are measuring.  He mentions several classes of assets that have experienced (are experiencing) inflation.
  • In an extended discussion about unions, Block said there are justifiable activities for unions.  But he feels many unions (and specifically public sector unions) are “legal and ethical monstrosities“.  He suggests they are “vicious, depraved and immoral” and “deny the right of free association“.

(Radio Interview, approx. 35 minutes)

…read more

Source: MISES INSTITUTE