You are browsing the archive for 2014 January 28.

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Audio: Walter Block on the Welfare State, Unemployment and Libertarianism

January 28, 2014 in Economics

By Walter Block

Here I go over the moderate view of libertarianism with Henrik Palmgren from Red Ice Creations. I explain why the welfare state creates poverty by creating non-intact families and I go over how the government subsidizing unemployment gives incentives for unemployment that would otherwise not be there in a libertarian world.

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Source: MISES INSTITUTE

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VIDEO: Peter Klein Explains “Coffee Market Fluctuations”

January 28, 2014 in Economics

By Mises Updates

Peter G. Klein responds to a recent NPR story by Uri Berliner entitled “Coffee Futures: The Highs And Lows Of A Cup Of Joe”. Dr. Klein explains how a free market in coffee commodities would function. Klein is the Mises Institute’s Executive Director and Carl Menger Research Fellow.

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Source: MISES INSTITUTE

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Georgia Governor Worsens Local Propane Shortage

January 28, 2014 in Economics

By Mises Updates

Don Printz, MD writes:

Georgia Governor Nathan Deal has just signed an executive order enforcing the “price gouging” rule for propane during the cold emergency. That’ll certainly encourage new suppliers to enter the market. I remember when some entrepreneurs brought a big supply of drinking water to Charleston, SC, for $5/gallon (usually about $1) after Hurricane Hugo wrecked the city water supply. The state called that price gouging if it were sold for more than $1.25. They sold it…and never returned.

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Source: MISES INSTITUTE

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Yuri Maltsev Explains the Tea Party

January 28, 2014 in Economics

By Mises Updates

6646

In today’s Mises Daily, the Mises Institute interviews Yuri Maltsev about his new book co-authored with Roman Skaskiw: The Tea Party Explained: From Crisis to Crusade, released in October by Open Court Press.

Mises Institute: What were the origins of what is now called the Tea Party movement?

Yuri Maltsev: As we explain in our book, the modern Tea Party movement began with a fundraiser by Ron Paul supporters on December 16th, 2007 (the 234th anniversary of the pre-revolutionary Boston Tea Party) and a backlash against the policies of President George W. Bush. This Tea Party fundraiser was followed by an even bigger one, the unprecedented Ron Paul “money bomb” of November 5th.

MI: Has the character of the Tea Party changed over time?

YM: Once the Tea Party proved resilient to criticism from both sides, numerous existing organizations and political careerists sought to join it, represent it, and/or influence it. There were pre-existing groups with over-lapping messages, other outraged groups searching in good faith to make themselves heard, and, of course, political opportunists seeking to either radicalize or co-opt the movement. A tenuous and perpetually shifting alliance formed between much of the Tea Party and parts of the Republican establishment. Three and a half years after Ron Paul’s Tea Party, Beck’s “Restoring Honor Rally” represented the most visible and publicized shift in the perception of Tea Party ideology toward social conservatism and a hawkish foreign policy.

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Source: MISES INSTITUTE

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The Ridiculousness of Economics?

January 28, 2014 in Economics

By Per Bylund

People have a strange habit of ridiculing economics for its assumptions and [benchmark] models of optimality. While modern mathematical economics (i.e., professional mathturbation) admittedly rely on sometimes outrageous assumptions that make most of the resulting predictions irrelevant, there is nothing ridiculous or unscientific about economic reasoning. In order to study the social world we need to consider and analyze what’s observed empirically from the point of view of the theory-derived counterfactual. Economic science necessarily begins with theory.

As Mises noted, in the social world there are no constant relations. Consequently, inductive number crunching based on (the seemingly irrefutable phenomenon) data cannot tell us much about the world. So we must rely on what we logically find to be necessarily true, and from it derive specific truths that help us understand observed phenomena in the real world. We thus create counterfactuals that help us assess and perceive what is actually going on, rather than blindly observe.

Interestingly, while economic reasoning is laughed at and ridiculed, people tend to place great faith in applied fields such as medicine as though it were a real science. So perhaps if economics were more like medicine, it would earn the respect as a science (side-effects aside)?

While simplified, what is considered “normal” in medicine are simple averages* or mode values arrived at by inductive (though sometimes voluminous) data sifting. Recommendations are hence based on what is rather than what should be (should, by the way, is considered unscientific). Granted, present average values may eventually be balanced (perhaps even corrected) by what has been learned about the functions of specific organs and the body as a whole, and about the impact of disease, malfunctions, etc. Yet these pieces of knowledge are also ultimately arrived at inductively, which means medicine suffers from a fundamental inability to identify e.g. harmful imbalances throughout populations (such that are due to long-lasting suboptimal cultural or eating habits, for instance).

The present revolution in how we view carbohydrates and fats is a case in point: medicine is of course able to measure the improved health values due to e.g. a “primal” diet (as one example), but is utterly unable to envision this result and, even less, make such predictions before the empirical observation has already been made. Instead, and based on the “normal” (average/mode) values of the population, we’ve been recommended to indulge in harmful sugars and grains and stay away from healthy fats. This is the problem of relying on induction, and while it might work well in …read more

Source: MISES INSTITUTE

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The President's 'Inequality' Absurdities

January 28, 2014 in Economics

By Michael D. Tanner

Michael D. Tanner

President Obama’s State of the Union Address is expected to focus heavily on income inequality. Swiping rather liberally from Mayor de Blasio’s playbook, the president will likely imply that the reason some Americans are poor is because other Americans are rich.

Such sentiments may play well to the president’s base, but in reality, there is no relationship between inequality and poverty. In fact, if we were to double everyone’s income tomorrow, millions of Americans would be lifted out of poverty, but inequality would actually increase.

When it comes to helping the poor, Obama offers nothing but failed policies.”

Still, income inequality has increased in America — especially during the first five years of the Obama administration. According to a study by Emmanuel Saez and Thomas Piketty, the top 1 percent of earners have captured more of the income gains under Obama than under that champion of the plutocracy George W. Bush.

In part, this is because the president’s choices over at the Federal Reserve have pursued an ­easy-money policy that has helped spur speculation and a rising stock market. Since the wealthy are much more heavily invested in the market, its 80 percent-plus rise since 2008 has meant the rich have gotten richer.

And when it comes to helping the poor, Obama offers nothing but failed policies.

For those Americans struggling to find a way out of poverty, few things are more important than a job. In fact, less than 3 percent of Americans who work full-time — including those in the entry-level, minimum-wage jobs — live in families with incomes below the poverty level. But the president’s policies all too often rip away that first rung on the ladder out of poverty.

Consider some of what President de Blasio … er, Obama will call for tonight. The centerpiece of his income-equality strategy is likely to be raising the minimum wage. Yet that would actually help few poor people. Research by Joseph Sabia of San Diego State University and Richard Burkhauser of Cornell found that if the federal minimum wage were upped to $9.50 per hour, only 11.3 percent of workers who would gain live in poor households, while more than 42 percent of those who would benefit live in households with incomes above 300 percent of the poverty level. The study also found that state and federal minimum-wage hikes between 2003 and 2007 had no effect on state …read more

Source: OP-EDS

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Letter to the Editor: Inflation Rate Is at 63% in Argentina

January 28, 2014 in Economics

By Steve H. Hanke

Steve H. Hanke

Dear Sir:

In combat, John Maynard Keynes often had an edge simply because he had a good feel for the data and a sense of magnitudes. Those who report on economics and finance (among others) could benefit from paying attention to that little Keynesian attribute.

Your report on Argentina’s most recent economic travails (“Currencies hit in wake of Argentina”, January 25) is a case in point. Your reporters note that one of the main causes of Argentina’s problems is that Buenos Aires “has allowed inflation to reach 25 per cent”. The Johns Hopkins-Cato Institute Troubled Currencies Project, which I direct, has been producing reliable estimates for Argentina’s implied annual inflation rate since 2012. Our current estimate is 63 per cent — more than double the figure reported in the FT.

Steve H. Hanke is a Professor of Applied Economics at The Johns Hopkins University in Baltimore and a Senior Fellow at the Cato Institute in Washington, D.C.

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Source: OP-EDS

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The State of the Union Is Wrong: How Washington Left the Public Behind on Foreign Policy

January 28, 2014 in Economics

By Benjamin H. Friedman

Benjamin H. Friedman

As President Barack Obama’s State of the Union address provokes the standard exchange of press releases and talking points, it’s worth remembering that the partisan foreign policy debate is almost always shallow. The real gap is not between Democratic and Republican leaders but between the political class and the broader public. Consider the Pew Research Center poll late last year that demonstrated that the U.S. public is less interested than the U.S. foreign policy elite in trying to manage foreign affairs. This set off a predictable debate about whether the public was becoming isolationist.

The American public, at least in recent memory, has always wanted a more restrained foreign policy than the one on offer from Washington.”

But hardly anyone pointed out that the results were nothing new: The American public, at least in recent memory, has always wanted a more restrained foreign policy than the one on offer from Washington. Understanding this gap requires looking beyond the latest election cycle and considering instead the factors that shape the U.S. foreign policy status quo.

The first factor is the public’s apathy toward foreign policy. As many studies have shown, people’s foreign policy preferences rarely determine their decisions when it comes to national elections. So political leaders — those in Congress and those vying for the White House — can generally buck the public on foreign policy without losing votes. It is not that politicians entirely ignore voters’ foreign policy views. But, at least compared with tax and entitlement issues, politicians have considerable rope to pursue their own agendas. Only in rare circumstances, such as very unpopular wars, do voters hold politicians to account on foreign policy.

What accounts, in turn, for the low salience of foreign policy? The short answer is that the American public is rich enough and safe enough that it simply need not worry very much about the rest of the world. No state menaces U.S. borders or regularly checks U.S. military actions abroad, as the Soviet Union once did. Trade accords matter a good deal for certain industries, but most of us barely notice them. For the majority of Americans, even the war in Iraq brought little worse than marginally higher tax rates and unsettling TV images. With bigger things to worry about, such as job security and health care, Americans have little incentive to inform themselves about foreign policies; it is <a target=_blank href="http://books.google.com/books?id=DtGJmgEACAAJ&dq=downs+economic+theory+of+democracy&hl=en&sa=X&ei=jRHOUsnLGcS2kQeQrYHoDg&ved=0CDkQ6wEwAg" …read more

Source: OP-EDS