You are browsing the archive for 2014 January 22.

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Turning Hard Times into Good Times: Thornton and Cochran

January 22, 2014 in Economics

By John P. Cochran

A link to my interview yesterday with Jay Taylor. The opening and closing have been edited to remove intro music, commercials and reference to the next segment. About 30 minutes.

http://jaytaylormedia.com/media/JohnCochran20140121.mp3

If you missed it here is Mark Thornton on last week’s Jay Taylor’s show. About 40 minutes.

Dr. Mark Thornton tells us how he believes the effect of current debt based monetary system will result in inflation or deflation. Download

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Source: MISES INSTITUTE

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Learn About a Fascinating Period in History

January 22, 2014 in Economics

By Mises Updates

Learn about the rise of the state and the struggle for liberty in the years between the world wars in historian Hunt Tooley’s online course The Interwar Years. Class starts tonight! And read Dr. Tooley’s interesting article included in the sign-up page.

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Source: MISES INSTITUTE

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Sen. Paul Honors the 2014 March for Life

January 22, 2014 in Politics & Elections

WASHINGTON, D.C. – Sen. Rand Paul today issued the following statement honoring the annual March for Life:
‘Since the Roe v. Wade decision in 1973, 55 million abortions have taken place in America. The question remains, can a civilization long endure if it does not respect Life? It is the government’s duty to protect life, liberty, and property, but primarily and most importantly, a government must protect Life,’ Sen. Paul said. ‘In order to protect the unborn from the very moment Life begins, I introduced the Life at Conception Act. Today, our nation wavers and our moral compass is adrift. Only when America chooses, remembers and restores her respect for life will we re-discover our moral bearings and truly find our way.’
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Source: RAND PAUL

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The Real World Ignores Mainstream Economics

January 22, 2014 in Economics

By Mark Thornton

So much for the use the mainstream economics’s dynamic stochastic general equilibrium models. This post from the Sound Money Institute points out that financial firms pay little attention to mainstream economics except in their attempts to predict the behavior of central banks. They note:

This should come as no surprise to students of the Austrian school. Ludwig von Mises criticized those employed mathematical wizardry in their economic thinking. By pointing out that economics does not need to follow the model of natural sciences such as physics and chemistry, he showed the way to a more real world economics, one not dominated by calculus and differential equations.

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Source: MISES INSTITUTE

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Caps Are Not the Answer

January 22, 2014 in Economics

By Dalibor Rohac

Dalibor Rohac

Ever since the collapse of Lehman Brothers, policymakers have tried to curb bankers’ bonuses, which are said to encourage excessive risk-taking by financial institutions. These efforts are not likely to yield much fruit. At most, they are a distraction from the much more serious problem of implicit government guarantees to the financial sector and ill-conceived aspects of financial regulation in Europe and in the United States.

According to new European Union rules, which came into force on Jan. 1, bonuses paid to bank executives must not exceed their basic annual salaries without the explicit consent of shareholders. And even then, the total amount is capped at twice the annual salary.

That will not do the trick. As Financial Times’ Tim Harford put it, the cap “is the equivalent of trying to limit alcohol consumption by saying your consumption of beers cannot exceed the number of tequila shots you downed at the beginning of the evening.” HSBC is already planning to augment the base pay for roughly 1,000 of its senior employees with stock paid every three months, which will need to be held for another 5 years, effectively increasing the scope for bonuses that can be paid.

Even if we ignore the flaws of this particular rule, existing research on the relationship between bonuses and risk-taking in finance is far from conclusive, with some studies arguing that it is “unlikely that incentive structures could be held responsible for inducing bank executives to focus on short-term results.”

More fundamentally, involving the government in micromanaging executive compensation in the financial sector does not solve the too-big-to-fail problem. Instead of interfering with private contracts between shareholders and bank executives, governments ought to ensure that financial institutions cannot impose the costs of their failures on the wider population.

Dalibor Rohac is a policy analyst at the Center for Global Liberty and Prosperity at the Cato Institute. He is on Twitter.

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Source: OP-EDS

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Nothing to Show for Obamacare

January 22, 2014 in Economics

By Michael D. Tanner

Michael D. Tanner

As Obamacare stumbles into its first full year of implementation, it leaves behind it a trail of broken promises. There was, of course, the promise that “if you like your health care plan, you can keep it.” There was the equally emphatic “if you like your doctor, you can keep your doctor.” And let’s not forget the president’s promise that health-care reform would “bring down premiums by $2,500 for the typical family.”

For all its costs, very few Americans have gained coverage thanks to the law.”

Now it appears another Obamacare promise is falling by the wayside: universal coverage.

From the beginning President Obama claimed that health-care reform “should mean that all Americans could get coverage.” And as recently as last November, the president was telling supporters that Obamacare had made “universal health care” a reality.

Of course, the actual reality was that Obamacare was never going to cover everyone. The Congressional Budget Office estimated that by 2023, Obamacare would still leave some 31 million Americans uninsured. That’s more people with insurance than we have today, no doubt, but far from universal coverage.

But now, the most recent enrollment data suggests that the health-care reform law will fall far short of even that modest achievement.

According to the administration, roughly 2.2 million people have signed up for health insurance through the program so far. An additional 3.9 million people have been enrolled in Medicaid. With 50 to 60 million uninsured Americans, by the most generous reading of the administration’s own numbers, Obamacare has at most covered 11 percent of the uninsured so far. Not a lot of bang for the buck.

But let’s look more closely at those numbers. First, the administration’s claim that 2.2 million Americans signed up for insurance includes all those who have picked an insurance plan, even if they haven’t yet paid for it. This is sort of like Amazon’s counting as a sale everything someone puts in his “shopping cart.” So far, between 66 and 70 percent of enrollees have probably actually paid their first month’s premium. Looking at fully paid enrollment thus cuts the private-insurance number down to roughly 1.55 million.

But wait: It also appears that most of those Obamacare enrollees were not previously uninsured. A survey by the management-consulting firm McKinsey & Co. found that just 11 percent of those purchasing insurance under Obamacare didn’t have coverage beforehand. Some were among the …read more

Source: OP-EDS

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Healthcare: High Prices and Few Kidneys

January 22, 2014 in Economics

By David Howden

Start with a simple proposition: America does not have a healthcare problem. The services provided are the best on this planet, and people from around the world travel to its hospitals and clinics to seek treatment. If they can afford it, that is.

If there is a problem it is not on the service side but rather with the costs. So, what is the main driver of these increasing costs?

Bad government policies force costs out of line with what they should be, creating a disconnect between supplies and demands. In few areas is this more apparent than in the case of organ sales.

It is illegal to sell your organs in the United States and most other countries around the world. In 2012 there were 95,000 men, women and children on a waiting list for kidneys but only 16,500 kidney operations performed. This translates to an implied waiting time of 4.5 years to get the simple organ.

Nor is this an improvement over recent history. Just a decade ago the average wait time was 2.9 years. With all the recent attention afforded to healthcare and the piles of money driven into it, this situation has worsened and those in need are worse off than they have ever been.

When supply is curtailed, as it is in the case of laws prohibiting organ sales, a black market develops to provide the good or a shortage occurs. Unfortunately, organ donation is not so straight forward and few are willing to trust a black market surgeon to perform the operation. This is unfortunate as our bodies come with a backup for most of our major organs just in case something goes wrong – a spare kidney, a portion of our liver, a lung or even an eyeball could all be given (or sold) to someone in need and we could still live a long and healthy life, except the law prohibits it. With no black market available to clear the market, those in need live in pain or die earlier than would otherwise be the case.

Besides the pity of the pain and suffering, this situation is a shame because it is just not very cost effective. The black markets that do exist around the world suggest that organs are not very expensive. At least, not relative to the cost of healthcare and support to people in need of them currently in the United States.

According to the …read more

Source: MISES INSTITUTE

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How Public Schools Cause Social Conflict

January 22, 2014 in Economics

Americans are diverse – ethnically, religiously, ideologically – but all must pay for public schools. The intention behind this arrangement is largely good: to bring people together and foster social harmony. But rather than build bonds, public schooling often forces people into conflict. A new, interactive map from Cato scholar Neal McCluskey illustrates how, rather than uniting people, public schools may be dividing them.

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Source: CATO HEADLINES

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Bringing 'Joy of Learning' to Biggest School System in U.S.

January 22, 2014 in Economics

By Nat Hentoff

Nat Hentoff

The new mayor of New York, Bill de Blasio, is seen as a prototypical liberal by fans and foes alike, but his most important appointment — making Carmen Farina chancellor of the city’s school system — is beyond such general categories.

The 70-year-old Farina, who’d been retired before agreeing to take the job, focuses on individual students, scorning collective standardized tests. She also insists that parents, largely overlooked by previous chancellors and mayors, be active partners with her.

As The >New York Times’ Ginia Bellafante noted:

“Farina is a progressive educator who speaks movingly about returning joy to the project of teaching children” (“Schools Chancellor Brings Joyful and Fierce Style,” Ginia Bellafante, The New York Times, Jan. 3).

Farina is against “myopic systems of learning in which real knowledge becomes a casualty of test knowledge, and what she calls ‘the gotcha mentality’ of the (Michael) Bloomberg years, when teachers and principals were often abandoned instead of being given whatever support they might need to improve.”

“Even the worst principals work hard,” Farina told Bellafante. “When we support them, then we can hold them accountable.”

Remarkably, before the new chancellor had retired, she was a 40-year member of the largest school system in the United States. Farina had been a teacher, principal, superintendent and even deputy chancellor in the Bloomberg administration.

However, she resigned from that position because her principles were being increasingly disrespected by those on top.

As a principal, when those beneath her did not become accountable, Farina could be tough, as Bellafante noted:

“Serving as the principal of Public School 6 on the Upper East Side during the 1990s, she overturned 80 percent of the staff, greatly improving the school’s standing.”

Farina told Bellafante about a teacher whose work was so bad that she would “wake up during the night thinking about the children who had to deal with this teacher.”

Where did Farina come from, this singular prober of children’s learning capabilities?

According to The Huffington Post’s Joy Resmovits, she “grew up in Brooklyn, the daughter of two Spanish immigrants who spoke that language at home” (“NYC Schools Chancellor Pick Carmen Farina Leaves More Questions Than Answers,” Joy Resmovits, Huffington Post, Dec. 30, 2013).

At the mayor’s press conference announcing Farina’s appointment, “she told a story of a postcard that her father, who she said had a third-grade education and taught her about the importance of education, received in the mail from her school. The postcard asked why …read more

Source: OP-EDS

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Whatever Happened to Peace Officers?

January 22, 2014 in Economics

By Mises Updates

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Jeff Deist writes in today’s Mises Daily:

We know that state monopolies invariably provide worse and worse services for more and more money. Police services are no exception. When it comes to your local police, there is no shopping around, there is no customer service, and there is no choice. Without market competition, market price signals, and market discipline, government has no ability or incentive to provide what people really want, which is peaceful and effective security for themselves, their families, their homes, and their property. As with everything government purports to provide, the public wants Andy Griffith but ends up with the Terminator.

There is no lack of Austrian scholarship in this area, the intersection between security services, state monopolies, public goods, and private alternatives. I would initially direct you toward two excellent primary sources to learn more about how markets could provide security services that no only produce less crime at a lower cost, but also provide those services in a peaceful manner.

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Source: MISES INSTITUTE