You are browsing the archive for 2014 March 24.

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Video: Jim Grant at AERC: “Hazlitt, My Hero”

March 24, 2014 in Economics

By Mises Updates

The Henry Hazlitt Memorial Lecture, sponsored by James Rodney. Recorded at the 2014 Austrian Economics Research Conference in Auburn, Alabama, on 20 March 2014. Includes an introduction my Joseph T. Salerno.

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Source: MISES INSTITUTE

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DC and NY: Mexican Legislators to Discuss Mexico's Marijuana Reform Proposals

March 24, 2014 in PERSONAL LIBERTY

By drosenfeld

Marijuana Decriminalization and Medical Marijuana Legislation Recently Introduced

Unprecedented Momentum for Drug Policy Reform Continues to Spread Throughout Latin America

This week, legislators from the Mexican Congress and the Mexico City Assembly will be in DC and NY to discuss the bills they introduced to decriminalize the consumption and purchase of marijuana for personal use in Mexico City and to legalize medical marijuana countrywide.

March 24, 2014

Drug Policy Alliance

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Source: DRUG POLICY

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Video: Hollenbeck on Exchange Rates and the Big Mac Index

March 24, 2014 in Economics

By Ryan McMaken

Frank Hollenbeck sends along this video explaining in further detail his discussion from the weekend’s Mises Daily.

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Source: MISES INSTITUTE

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Krugman’s Lie: WWII Was Not A Splendid Exercise in Keynesian Debt Finance

March 24, 2014 in Economics

By Mises Updates

RationingBoardNOLAVachonC

by David Stockman

From David Stockman’s Contra Corner. Remarks to the Committee For The Republic, Washington DC, February 2014 (Part 5 in a 6-Part Series) Go to Part 1.

World War II soon delivered another blow to the old-time fiscal religion. Not only did that vast expansion of war production fuel the illusion that New Deal statism had alleviated an endemic crisis of capitalism, but it also became heralded as a splendid exercise in Keynesian deficit finance when, in fact, it was nothing of the kind.

The national debt did soar from less than 50 percent of GDP in 1938 to nearly 120 percent at the 1945 peak. But this was not your Krugman’s benign debt ratio— or proof that the recent surge to $17 trillion of national debt has been done before and had been proven harmless.

Instead, the 1945 ratio was an artifact of a command and control war economy which had banished civilian goods including new cars, houses and most consumer durables, and tightly rationed everything else including sugar, butter, meat, tires, shoes, shirts, bicycles, peanut brittle and candied yams.

With retail shelves empty the household savings rate soared from 4 percent in 1938-1939 to an astounding 35 percent of disposable income by the end of the war.

Consequently, the Keynesians have never acknowledged the single most salient statistic about the war debt: namely, that the debt burden actually fell during the war, with the ratio of total credit market debt to GDP declining from 210 percent in 1938 to 190 percent at the 1945 peak!

This obviously happened because household and business debt was virtually eliminated by the wartime savings spree; households paid off what debts they had left after the liquidation of the 1930s depression and business generally had no ability to borrow except for war production. Thus, the private  debt ratio plunged from 150 percent of GDP to barely 60 percent, thereby making massive headroom in the nation’s bloated savings pool for the temporary surge of public debt.

In short, the nation did not borrow its way to victory via a Keynesian miracle.  Measured GDP did rise smartly because half of it was non-recurring war expenditure. But even then, the truth is that the American economy “regimented” and “saved” its way through the war.

Supplementing the aforementioned “voluntary” savings spree were “mandatory savings” in the form of a staggering increase in taxation.  Confiscatory levies on the wealthy and merely onerous taxation on everyone else caused the tax take to rise from …read more

Source: MISES INSTITUTE

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Venice’s Secession from Italy, Hans-Hermann Hoppe, and Nation-States

March 24, 2014 in Economics

By Ryan McMaken

800px-Venezianische_Kolonien

With an 89 percent majority, the voters of Venice have elected to leave Italy. In practice, what this really means is that the Venetians plan to no longer send tax revenues to Rome. Apparently, the Venetians, who inhabit the historical capital of one of humanity’s richest and most successful republics, wish to no longer subsidize the famously-corrupt bureaucrats in Rome. Southern Italy has long been regarded by the richer, cleaner, and more efficient North as a drain on their resources. According to the Daily Mail, at least, there is talk of extending the secession movement to other areas of the North as well.

One pro-secessionist sounds like a Hoppean:

Campaigner Paolo Bernardini, professor of European history at the University of Insubria in Como, northern Italy, said it was ‘high time’ for Venice to become an autonomous state once again.

‘Although history never repeats itself, we are now experiencing a strong return of little nations, small and prosperous countries, able to interact among each other in the global world.’

‘The Venetian people realized that we are a nation (worthy of) self-rule and openly oppressed, and the entire world is moving towards fragmentation – a positive fragmentation – where local traditions mingle with global exchanges.’

Naturally, the large nation-states of Europe hate and fear developments like this. But for anyone who can remember history, there’s little “tradition” here that the nation-states can lay claim to. Italy is a made-up country, much like Germany, hammered together in the 19th century by powerful authoritarian politicians like Otto von Bismarck who of course hated classical liberalism and capitalism with every fiber of his being.

It will be interesting to see what Rome does. Will they send an army to take their tax money? Perhaps they’ll just wage some sort of campaign of hate against the Venetians, appealing to Italian patriotism. Given that Obama recently declared all secession movements illegitimate (except those supported by the US Government, of course) it’s unknown how much support Venice can expect from the international community.

In a 2004 interview, Hans-Hermann Hoppe spoke on the advantages of small independent (and wealthier) countries:

To the contrary, the greatest hope for liberty comes from the small countries: from Monaco, Andorra, Liechtenstein, even Switzerland, Hong Kong, Singapore, Bermuda, etc.; and as a liberal one should hope for a world of tens of thousands of such small independent entities. Why not a free independent city of Istanbul and Izmir, which …read more

Source: MISES INSTITUTE

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Judge Napolitano: The Pope, the Constitution, and Economics 101

March 24, 2014 in Economics

By Mises Updates

The Lou Church Memorial Lecture, sponsored by the Lou Church Foundation. Recorded at the 2014 Austrian Economics Research Conference in Auburn, Alabama, on 20 March 2014. Includes an introduction by Joseph T. Salerno.

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Source: MISES INSTITUTE

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Let the Data Speak: The Truth Behind Minimum Wage Laws

March 24, 2014 in Economics

By Steve H. Hanke

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Steve H. Hanke

President Obama set the chattering classes abuzz after his recent unilateral announcement to raise the minimum wage for newly hired Federal contract workers. During his State of the Union address in January, he sang the praises for his decision, saying that “It’s good for the economy; it’s good for America.” As the worldwide economic slump drags on, the political drumbeat to either introduce minimum wage laws (read: Germany) or increase the minimums in countries where these laws exist — such as Indonesia — is becoming deafening. Yet the glowing claims about minimum wage laws don’t pass the most basic economic tests. Just look at the data from Europe (see the accompanying chart).

There are seven European Union (E.U.) countries in which no minimum wage is mandated (Austria, Cyprus, Denmark, Finland, Germany, Italy, and Sweden). If we compare the levels of unemployment in these countries with E.U. countries that impose a minimum wage, the results are clear. A minimum wage leads to higher levels of unemployment. In the 21 countries with a minimum wage, the average country has an unemployment rate of 11.8%. Whereas, the average unemployment rate in the seven countries without mandated minimum wages is about one third lower — at 7.9%.

This point is even more pronounced when we look at rates of unemployment among the E.U.’s youth — defined as those younger than 25 years of age (see the accompanying chart).

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In the twenty-one E.U. countries where there are minimum wage laws, 27.7% of the youth demographic — more than one in four young adults — was unemployed in 2012. This is considerably higher than the youth unemployment rate in the seven E.U. countries without minimum wage laws — 19.5% in 2012 — a gap that has only widened since the Lehman Brothers collapse in 2008.

The glowing claims about minimum wage laws don’t pass the most basic economic tests.”

So, minimum wage laws — while advertised under the banner of social justice — do not live up to the claims made by those who tout them. They do not lift low wage earners to a so-called “social minimum”. Indeed, minimum wage laws — imposed at the levels employed in Europe — push a considerable number of people into unemployment. And, unless those newly unemployed qualify for government assistance (read: welfare), they will sink below, or further …read more

Source: OP-EDS

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A Former Insane Asylum Is a Fitting Place for the Mess That Is Homeland Security

March 24, 2014 in Economics

By Gene Healy

Gene Healy

It’s “a boondoggle of epic proportions,” an exasperated Rep. Richard Hudson, R-N.C., told Department of Homeland Security Secretary Jeh Johnson at a recent congressional hearing, “if you’re in the middle of a huge mess, you stop digging.”

The specific object of Hudson’s ire was department’s massive new headquarters complex in southeast Washington, the biggest federal construction project since the Pentagon. As the Washington Times reported Sunday, the project — featuring amenities like eco-friendly “rainwater toilets” and sustainable Brazilian hardwood decking — is running at least a decade late and over a billion dollars short.

Since 9/11, spending under the rubric “homeland security,” both inside and outside the department, dwarfs even the New Deal.”

But the larger point applies to the department itself and the nebulous, all-encompassing rubric under which it’s organized. “Homeland Security” is a mess; “stop digging.”

“We should finish what we started,” Johnson countered, “the morale of DHS, unity of the mission, that emphasis would go a long way if we could get to a headquarters.”

The department, which ranks dead last among large agencies on the Partnership for Public Service’s 2013 “Best Places to Work in the Federal Government” list, could use a morale boost. But it would take a pretty goth sensibility to be cheered up by a move to the site of what Congress established in 1855 as “St. Elizabeths Government Hospital for the Insane.”

The hospital’s former employees include the inventor of the “icepick lobotomy”; among its famous inmates were disgruntled federal job-seeker Charles Guiteau, who assassinated President Garfield, and pioneering recreational chemist Owsley Stanley, who supplied Ken Kesey’s “merry pranksters” with high-grade LSD. “One of many historically interesting features of the site,” the redevelopment webpage boasts, “is a cemetery originally established for … ‘friendless patients.’ ”

“It’s a terrific place,” Johnson told Hudson, “I am envious. But I will probably never work there.” (Tough break.)

Johnson’s other goal, “unity of the mission,” has bigger obstacles than a dispersed workforce, as that House Homeland Security Committee hearing made clear.

“Syria has become a matter of homeland security,” committee Chairman Rep. Michael McCaul, R-Texas, insisted. Judging by the other topics covered, so have “massive flood insurance premium increases”; the capture of “top drug lord El Chapo Guzman”; “conducting proper oversight over the state of New Jersey” for Sandy relief; the “human-trafficking question”; and “put[ting] pressure on [the Transportation Security Administration] to use small businesses.”

More than a decade after 9/11, the Congressional Research Service <a target=_blank target="_blank" …read more

Source: OP-EDS

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Anti-Money Laundering Surveillance Hurts Banking Services

March 24, 2014 in Economics

By Richard W. Rahn

Richard W. Rahn

To whom would you be willing to trust with all of your financial and tax information: close family members or the U.S. government and foreign governments, including Russia?

For the last several decades, global liberty-haters have dreamt that all financial privacy would be eliminated. They have sought out a variety of excuses to act as Peeping Toms peering into your bank accounts. In the 1980s, their big push was to enact “anti-money laundering” legislation, with the claim that it would make catching drug dealers and other assorted criminals easier. The United States passed its first anti-money laundering law in 1986 — despite the fact that no one could objectively define money laundering, because it is not an action but an “intent” to act unlawfully.

The whole global anti-money laundering regime makes no economic sense, is unworkable, and is morally repugnant.”

In 1989, at the G-7 summit in Paris (before Russia joined and made it the G-8), it was decided to create an international organization dedicated to combating money laundering — duplicating the efforts of the International Monetary Fund (IMF) and the Organization for Economic Cooperation and Development (OECD) which already had the responsibility. The new organization was called the Financial Action Task Force on Money Laundering (FATF). Over time, the task force expanded its membership to include some corrupt governments such as Russia (which is alleged to engage in money laundering). By the way, a Russian government official, Vladimir Nechaev, is now president of the task force.

As a result of all the global anti-money laundering regulations, total compliance costs for financial institutions are now in the hundreds of billions of dollars. Basic banking and other financial services have been reduced and even eliminated for tens of millions of people around the world. Have all of these regulatory costs done any good? In an effort to answer that basic question, the Center for Law and Globalization (a partnership of the University of Illinois College of Law and the American Bar Association) published a report in January, “Global Surveillance of Dirty Money.” The authors had the full cooperation of the IMF and FATF, yet the conclusions were damning. One of the authors of the report, Terence Halliday, stated: “We find that the current system is pervasive and highly intrusive but without any evidence of tangible effect.” The authors were quoted in The Wall Street Journal as saying the IMF and FATF have built a “Potemkin village” and a “paper reality” based on “a plausible folk theory,” rather than data and evidence of what works.

Bad ideas never stop governments. Rather than reverse course, they tend …read more

Source: OP-EDS