You are browsing the archive for 2014 March 19.

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The Economics of Sweatshops, England’s Levellers, and More

March 19, 2014 in Economics

By Ryan McMaken

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The February issue of The Free Market is now online containing new articles on the economics of “sweat shops” and a brief history of the world’s first modern libertarian movement.

Benjamin Powell speaks with the Mises Institute about his new book Out of Poverty: Sweatshops In the New Global Economy, and how so-called sweatshops have long been a key ingredient in an economy’s transition from poor country to industrialized rich country:

 In short, sweatshops provide the least-bad option for the workers who work in them. But      sweat­shops are better than just the least-bad option. Sweatshops bring with them the  proximate causes of economic development—capital, technology, and the opportunity to build   human capital. If countries respect private property rights and economic freedoms, these    proximate causes of development lead to higher productivity, which eventually leads to higher pay and better working conditions.

Roberta Modugno writes on England’s Levellers, the first modern libertarian movement:

The first-ever libertarians were the Levellers, an English political movement active inthe seventeenth century. The Levellers contributed to the elaboration of the      methodological and political paradigm of individualism, and they are at the origin of the radical strand of classical liberalism. While the Levellers are often character­ized  as a quasi-socialist movement, closer examination shows that the Levellers had much more in common with advocates for free markets than with socialists.

February’s issue also includes scholar and alumni notes plus the latest news from the Mises Institute including highlights from January’s Mises Circle and more on the latest translations, seminars and publications from the Mises Institute and Austrian school scholars.

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Source: MISES INSTITUTE

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ABCT and US Monetary Policy Effects in Latin America

March 19, 2014 in Economics

By John P. Cochran

The effects of US monetary policy on Colombia and Panama (2002-2007)

More good work from Metro State’s Nicolas Cachanosky

Highlights:

  • Studies international effects on two small economies with different forex regimes.
  • Studies how these two economies react to US monetary policy.
  • Relative capital intensive sectors are more sensitive to US monetary policy.
  • This common characteristic can explain business cycle co-movements.

Abstract

I study the economies of Colombia (floating exchange rate) and Panama (dollarized) to illustrate how the monetary policy of a large economy can export capital structure distortions to small open economies that follow different exchange rate regimes. The paper contributes to the literature on international business cycles in two ways. First, it adds to recent research that extends the Mises-Hayek business cycle theory to an international context. Second, most current research abstracts from effects on the production structures of emerging market economies when analyzing the transmission of monetary policy shocks. This paper seeks to fill this gap by studying structural effects of U.S. monetary policy on the economies of Colombia (floating exchange rate) and Panama (dollarized.)

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Source: MISES INSTITUTE

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Rifkin’s Folly

March 19, 2014 in Economics

By William Anderson

Jeremy Rifkin

Jeremy Rifkin

Jeremy Rifkin long has perfected the art of adding two and two and getting five. In the 1980s, he claimed that the Law of Entropy made it impossible to a free economy to exist, which meant that the State needed to plan and run things. (How the State would triumph over the Second Law of Thermodynamics is anyone’s guess, but Rifkin doesn’t need facts or even science, just wild conjecture.) He later declared that a new “hydrogen economy” was just around the corner – government just needed to engage in central planning and order hydrogen to be our new fuel of choice.

However, in an op-ed article in the New York Times, Rifkin does the impossible: he outdoes himself. Rifkin wants us to believe that the Law of Scarcity essentially has been repealed, and that the conditions this situation creates are unsettling. He writes:

We are beginning to witness a paradox at the heart of capitalism, one that has propelled it to greatness but is now threatening its future: The inherent dynamism of competitive markets is bringing costs so far down that many goods and services are becoming nearly free, abundant, and no longer subject to market forces. While economists have always welcomed a reduction in marginal cost, they never anticipated the possibility of a technological revolution that might bring those costs to near zero.

Understand something at the very beginning: to say that something is “no longer subject to market forces” is to say that the good in question is non-scarce, or free. That means that every (or nearly every) factor used in producing that good also is non-scarce, and that the full costs to the consumers using such goods also are zero. All I can say is that this contention is an absurdity.

It is true that the advent of low marginal costs has forced new ways of retailing, but economic progress always has done that. For example, a generation ago, Wal-Mart was able to seize huge chunks of market share because the company had developed a distribution and retail strategy that made is a much lower-cost producer than were the other retailers, including Sears, J.C. Penny, and K-Mart. That does not mean markets have disappeared or are no longer relevant; likewise, Wal-Mart now finds itself under pressure from other retailers as well as the Internet. Markets still prevail, but in different forms.

Before going further, …read more

Source: MISES INSTITUTE

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Watch the Austrian Economics Research Conference Online

March 19, 2014 in Economics

By Mises Updates

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For those who are unable to attend this year’s AERC, we’re broadcasting all the named lectures in real time this year, including the plenary talks from Jim Grant, Judge Napolitano, J. Huston McCulloch, Ed Dolan, and Peter Klein.

Other selected sessions will be streamed as well. Check back here for updates beginning Thursday morning.

Go to the Mises Media link for video streams.

…read more

Source: MISES INSTITUTE

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Civic Engagement

March 19, 2014 in Economics

By Randall Holcombe

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My local newspaper, The Tallahassee Democrat, ran a story on March 19 reporting on a talk given by former Florida Governor and former US Senator Bob Graham. In his talk, Graham calls for more civic engagement. His talk was a part of a larger program titled “Choosing to Participate: The Power of Civic Engagement.”

For most citizens, civic engagement is futile. I’m speaking from my own experience. The few times I have attempted to speak at city commission meetings or county commission meetings, I’ve been met with indifference. I’ve been given a three minute time limit to speak (I can understand why they do that), and then when I’m speaking I’ve watched commissioners get up and leave in the middle of my three minutes, or talk among themselves as I’ve been talking to them. For people like me, civic engagement is nothing but frustration. Most people realize this, which is why they would rather use their time in other ways rather than waste it on civic engagement.

But what happens when people who really can make a difference choose to participate? Two of those individuals are Charles and David Koch, who Senate Majority Leader Harry Reid called “un-American” for their civic engagement. Reid said, “The Koch brothers and other moneyed interests are influencing the politics in a way not seen for generations. … Not only have Senate Republicans come to the floor to defend the Koch brothers personally, they have again and again defended the Koch brothers’ radical agenda – and it is radical, at least from the middle-class perspective.”

It is interesting that Senator Reid says, on the one hand, that the Koch brothers have a radical agenda, and on the other hand, that many of his colleagues in the Senate support that agenda.

I don’t want to draw a connection between the ideas of former Senator Graham and Senator Reid, who are two different individuals. But it is worth a remark that while some politicians call for more civic engagement, others castigate people for their civic engagement, when those people (1) have ideas different from their own, and (2) are actually able to participate in a way that makes a difference.

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Source: MISES INSTITUTE

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Libertarianism 101

March 19, 2014 in Economics

By Robert A. Levy

Robert A. Levy

Libertarianism is a political philosophy grounded on these propositions: Adult individuals have the right and responsibility to decide important matters about their own lives, but they may not infringe on the equal rights of others. Government’s role is to secure those rights. The key word, from the Declaration of Independence, is “secure,” not “grant.” We do not get our rights from government. Individuals have natural rights, independent of government. That’s a bedrock libertarian principle and, it’s fair to say, the Founders were libertarians.

Within that framework, consider the polemic against libertarianism by Rev. Michael P. Orsi (“Libertarian Candidate Not Good,” Naples Daily News, March 16) — as reduced to five assertions:

Unlike liberals and conservatives, libertarians have a consistent, minimalist view of the proper role of government.”

1. “Extreme individualism” is contrary to the “common good.”
Libertarians understand the necessity of cooperation to attain personals goals. My colleague, Tom Palmer, observes that individuals can “never actually be self-sufficient, which is precisely why we must have rules to make peaceful cooperation possible.” Government enforces those rules. The risk, however, is that rules too extensive will produce, not a common good for all, but rather a veneer for a system of special favors to secure largesse for the politically connected at the expense of others. By contrast, individualism promotes the common good, spontaneously, as long as no commanding power preempts freely chosen actions.

2. Belief in “every man for himself” is incompatible with “concern for the poor.”
From an ethical perspective, it may be morally right to help the poor; but in a completely free society we should have a political right not to do so. Put differently, a theory of justice is not always congruent with a theory of politics. One can condemn bad conduct without empowering government to take remedial action. Yes, charity is a virtue. But government-compelled charity is a contradiction in terms — a political act that negates real charity, which must be voluntary, not coerced.

As it happens, the evidence proves conclusively that more wealth, including a greater abundance for the poor, is a by-product of individual liberty.

3. Government intervention is sometimes necessary — for example, “to prevent monopolies.”
Libertarians are not opposed to reasonable safety regulations, sensible compromises of civil liberties to enhance national security, or even selective gun controls. Moreover, we recognize that markets are not perfect. But neither is government. The …read more

Source: OP-EDS

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No Obamacare Slogan Is Going to Save Dems

March 19, 2014 in Economics

By Michael D. Tanner

Michael D. Tanner

Since the Republican victory in Florida’s special congressional election last week, Democrats have been struggling with how to bear the electoral albatross that is Obamacare.

Having apparently decided that they cannot run away from the president’s health-care law, and seeing their “mend it don’t end it” strategy come up short in Florida, a growing number of pundits and strategists are now calling for Democrats to trumpet their support for the law.

Supporters of the law will never find a winning message for this fall.”

For example, Democratic strategist Robert Shrum says, “Instead of running away from health reform, [Democrats] have to run on it.” Alec MacGillis, a senior editor at The New Republic, claims, “What Democrats need this year is more Obamacare, not less.” Washington Post columnist Eugene Washington agrees: “Democrats facing close elections this fall should play offense [and] … talk about what’s right with Obamacare.”

Which raises the question, what exactly is “right with Obamacare?”

Universal coverage? Robinson says Democrats “should talk about the millions of formerly uninsured Americans who now have coverage.” Except that there aren’t as many of them as you’d think: According to a recent Gallup survey, there were roughly 41.3 million uninsured Americans as of October 1, 2013, when sign-ups for Obamacare began. Since then, roughly 2.8 million Americans found insurance, the survey suggests, reducing the uninsured rate from 17.1 percent to 15.9 percent of American adults. That’s far from universal coverage. In fact, it’s still a bigger share of Americans uninsured than before Obama was elected. Much of that recent progress is likely due to factors besides Obamacare, such as the ongoing economic recovery.

Consider another set of figures: The administration claims that roughly 5 million Americans have signed up for insurance through Obamacare exchanges. That means that if the administration gets really, really lucky over the next twelve days, it might meet its already reduced goal of 6 million enrollments.

But that 5 million number doesn’t tell the whole story: Estimates suggest that only 80 percent of those who have picked a plan have actually paid their first month’s premiums. An additional 3 to 5 percent paid once, but then stopped. Moreover, there is considerable doubt about how many of those signing up through the exchanges were previously uninsured, as opposed to people voluntarily or involuntarily switching plans. According to a report from McKinsey, just 27 percent of those signing up in February were uninsured during …read more

Source: OP-EDS

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Obama, Bush, Clinton: U.S. Ignores Human Rights Abroad

March 19, 2014 in Economics

By Nat Hentoff

Nat Hentoff

Among the reporter-columnists whose bylines I never miss, Pulitzer Prize winner Charlie Savage of The New York Times is at the top of the list. He is penetratingly factual and stays on stories that are often surprising.

At the bottom of page 12 of the March 14 Times — in what should have been on the front page, garnering Savage another Pulitzer — was this: “U.S., Rebuffing U.N., Maintains Stance That Rights Treaty Does Not Apply Abroad.”

This treaty, signed by our Senate in 1992, is the International Covenant on Civil and Political Rights, which, Savage notes, “bans arbitrary killings, torture, unfair trials and imprisonments without judicial review” (The New York Times, March 14).

This treaty jumped into the news, thanks to Savage, because, as he states in his opening paragraph: “The Obama administration declared … that a global Bill of Rights-style treaty imposes no human rights obligations on American military and intelligence forces when they operate abroad.”

Speaking in our country’s name, the “administration affirmed that stance in a meeting in Geneva of the United Nations Human Rights Committee …”

Savage makes clear that Obama’s administration has not been the only one to take that position: “The United States first expressed the stance in 1995 after the Clinton administration was criticized for its policy of intercepting Haitian refugees at sea, and the Bush administration later amplified it to defend its treatment of terrorism suspects in overseas prisons.”

George W. Bush and Dick Cheney sure did amplify it. Remember the CIA secret prisons, waterboarding and other U.S. “enhanced interrogations” that were as far from human rights as the agency could malignantly manage?

Other reporters and I have documented scores of Obama continuations of Bush-Cheney atrocities abroad. It was hardly surprising, as I wrote back in 2010, that “there were hundreds more photographs of American torture practices in Afghanistan as well as in Iraq that President Obama commanded … must not be released, despite a previous court order to the contrary. He said they would have a ‘chilling effect’ on further investigations of abuses of detainees” (my column, “Torture Under Obama,” Feb. 17, 2010).

How sensitive of him to consider possible U.S. torturers!

Savage quotes Mary McLeod, Obama’s acting legal adviser at the State Department:

“The United States continues to believe that its interpretation — that the covenant applies only to individuals both within its territory and within its jurisdiction — is the most consistent with the covenant’s language and …read more

Source: OP-EDS

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Robert Gates: The Soldiers' Secretary?

March 19, 2014 in Economics

By Christopher A. Preble

Christopher A. Preble

When Robert Gates, the only Secretary of Defense to have served in two successive administrations—one Republican, one Democratic—published a memoir of his experiences in January, the Washington spin machine jumped into action. Hyper-partisans were quick to find passages that painted their most hated rivals in the least flattering light, then claimed that Gates’s tome confirmed what they had been saying all along. If Gates was annoyed by the cherry-picking, he should have anticipated it. The “Washington read”—which starts with the index and ends with someone finding his or her name—is a time-honored tradition.

But a selective read paints an inaccurate picture of Gates’s book, and Gates the man. The full story that emerges from this detailed and often deeply personal account of his four-and-a-half years in office is of a man fed up with the dysfunction of the nation’s Capitol, not one filled with disdain for a particular party.

The fact that Robert Gates asked many of the right questions but was not able to follow the answers to their logical conclusion is not a happy portent for the nation.”

Gates has nice things to say about both George W. Bush and Barack Obama. He allows that domestic politics figured more prominently in national-security debate under Obama but were never the conclusive factor in his decisions. Both presidents made “decisions they believed to be in the best interest of the country regardless of the domestic political consequences … thereby earning my highest possible respect and praise … . I liked and respected both men.”

He does not say the same about members of Congress. But the problem is with the institution itself, not the partisan identities of the persons in it.

Someone inclined to attribute the worst motives to most people, but especially to public officials, would note the bitter irony of Robert Gates, the ultimate establishment insider, railing against the failings of the establishment. Then again, anyone who spends his days railing against the establishment is unlikely ever to become a part of it or to have any influence with it. The self-assured outsider can exult in being vindicated when the foreign-policy elite’s cherished beliefs come crashing into reality, but he is in no position to stop the disasters from happening in the first place.

Gates, who served eight different presidents and was a senior national security official to four of them, was in such a position …read more

Source: OP-EDS

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The Obama Administration’s Trade Agenda Is Crumbling

March 19, 2014 in Economics

The nation has been living with the Obama administration’s trade policy for five years, with relatively little to show for it. In the remaining three years, is the executive branch likely to obtain Trade Promotion Authority (TPA) and successfully conclude the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP)? In a new paper, Cato scholar Daniel R. Pearson argues that, while it is still theoretically possible, the political price of trying to do so will likely prove too high.

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Source: CATO HEADLINES