You are browsing the archive for 2014 April 02.

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The Austrian Paradigm in Environmental Economics

April 2, 2014 in Economics

By Ryan McMaken

Writes Ed Dolan, the 2014 F.A. Hayek Memorial Lecturer at the Austrian Economics Research Conference:

Today on my blog I posted the second in a two-part series on Austrian environmental economics and emissions trading, based in part on the Hayek lecture I gave at the Mises Institute conference in Auburn last month. I thought that some of the readers of your blogs might be interested in it. I am sure you and your readers will find parts of it controversial, and I would very much like to get a discussion going. Here are the links: Part 1  and Part 2

Prof. Dolan’s AERC lecture is here:

…read more

Source: MISES INSTITUTE

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Audio: Mark Thornton Examines the History of U.S. Central Banks

April 2, 2014 in Economics

By Mises Updates

Interviewed by host Alan Butler, Mark Thornton discusses the first three central banks in the United States.

…read more

Source: MISES INSTITUTE

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Randall Holcombe: South Royalton After 40 Years

April 2, 2014 in Economics

By Mises Updates

From the panel recorded at the 2014 Austrian Economics Research Conference in Auburn, Alabama, on 22 March 2014.

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Source: MISES INSTITUTE

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Deflating the Deflation Myth

April 2, 2014 in Economics

By Mises Updates

Burst your bubble

Chris Casey writes in today’s Mises Daily

If deflation does not cause recessions (or depressions as they were known prior to World War II), what does? And why was it so prominently featured during the Great Depression? According to economists of the Austrian School of economics, recessions share the same source: artificial inflation of the money supply. The ensuing “malinvestment” caused by synthetically lowered interest rates is revealed when interest rates resort to their natural level as determined by the supply and demand of savings.

In the resultant recession, if fractional-reserve-based loans are defaulted or repaid, if a central bank contracts the money supply, and/or if the demand for money rises significantly, deflation may occur. More frequently, however, as central bankers frantically expand the money supply at the onset of a recession, inflation (or at least no deflation) will be experienced. So deflation, a sometime symptom, has been unjustly maligned as a recessionary source.

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Source: MISES INSTITUTE

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Mises and the Diminished A Priori

April 2, 2014 in Economics

By Mises Updates

6711 (1)

David Gordon writes in today’s Mises Daily:

In a recent post, “Machlup and Mises,” on the blog Coordination Problem, Peter Boettke has called attention to and summarized an important paper, “The Epistemological Implications of Machlup’s Interpretation of Mises’s Methodology” written by Gabriel Zanotti and Nicolás Cachanosky. According to these authors, Murray Rothbard advanced an influential interpretation of Mises’s methodology that led mainstream economists to view Mises as an extremist.

Rothbard, Zanotti and Cachanosky claim, maintained “that Mises would have said that economic science is completely a priori, without any room for auxiliary hypotheses that are not directly deducible from praxeology” (p. 2).[1] To understand this, we first need to consider what is meant by calling a propositiona priori . This is a proposition that can be known to be true just by thinking about it: you don’t need to examine the world to see whether it’s true. “2 + 2 = 4” is a priori true: once you understand what the proposition says, you can grasp that it’s true. You don’t need to keep counting objects to see whether the claimed equality holds true. By contrast, “Mises wroteHuman Action” is not a priori true: just thinking about the proposition will not tell you whether it is true.[2]

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Source: MISES INSTITUTE

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What Do American Indians Deserve: Name Changes or Policy Changes?

April 2, 2014 in Economics

By Chris Edwards

Chris Edwards

The movement to rid sports teams of Indian-themed names has picked up steam in recent years. In Washington D.C., activists have long pressured the Redskins to find a new name, but so far football team owner Dan Snyder is not budging.

Last week, however, Snyder launched an initiative to try and diffuse some of the bad press he has been receiving. Snyder has created a foundation to provide aid to needy Indian tribes. Recently, he and his staff visited a couple dozen reservations, an experience that has prompted a promise to help “tackle the troubling realities facing so many tribes across our country.”

If Dan Snyder wants fundamental change, his new foundation should champion institutional reforms.”

Those realities are very troubling. There are about 1 million American Indians living on reservations, and their income levels are far lower, and poverty levels far higher, than other Americans. So let’s take Snyder at his word, and hope that his Original Americans Foundation can help to address some of the problems facing the tribes.

For its part, Congress spends little time addressing Indian issues. It hands out more than $8 billion a year in aid to reservations and it gives special preferences to some tribes that are good at lobbying. But Congress puts little effort into tackling long-term structural problems on reservations. To make matters worse, the main federal agency that tribes are forced to deal with—the Bureau of Indian Affairs (BIA)—has long been one of the most dysfunctional in government.

Let’s do a brief review of federal policy. American Indians and the government have had a long, complex, and often sordid relationship. The government has taken many actions to deprive Indians of their lands, resources, and freedom. The aims of federal policies have gyrated wildly over two centuries, and most policies have failed, as is evident from the poor economic conditions on many reservations.

Historically, the federal government micromanaged Indian reservations with subsidies and regulations, and that top-down control had the damaging effect of stifling private initiative and private enterprise. Some good news is that there has been a movement towards Indian self determination in recent decades, which is a step in the right direction.

However, a key problem on reservations continues to be that individuals generally lack property rights to land. Land ownership on reservations is a mix of “fee simple,” “individual trust,” and “tribal trust.” Fee simple means land that is …read more

Source: OP-EDS

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No, the Sky Isn’t Falling: A Level-headed Guide to McCutcheon v. FEC

April 2, 2014 in Economics

By Trevor Burrus

Trevor Burrus

Today the Supreme Court decided McCutcheon v. FEC and struck down the aggregate contribution limits for contributions in federal elections. Over the course of the next few weeks, if not years, there will be a lot of hyperbolic claims about how the case is another nail in the coffin of our democracy. It will be paired with Citizens United as a demonstration that the Roberts Court is doggedly trying to sell our country to the highest bidder.

In reality, the decision is a principled interpretation of the First Amendment that would have garnered wide support from many on the left just 30 years ago. What is truly frightening about the decision is that the four dissenting justices are promoting a vision of the First Amendment that is absolutely incompatible with limited government and free speech.

First, a little background. Since the mid-’70s, campaign finance law has been based on the core distinction between contributions and expenditures. Contributions go to candidates directly whereas expenditures are spent independently of candidates. In the seminal case of Buckley v. Valeo, the Court held that the government has a more compelling interest in regulating and limiting contributions than expenditures because of the threat of quid pro quo corruption, that is, the one-for-one exchange of contributions for political favors. In fact, preventing quid pro quo corruption is essentially the entire reason we have thousands of pages of campaign finance laws and regulations.

The Buckley decision thus upheld the limit on contributions to candidates, the so-called base limit, which is now $2,600. But there is another limit on contributions, the so-called aggregate limit, limiting the total amount that an individual can give to all candidates and political committees to which he contributes.

In the most basic sense, the question the Court was asked in McCutcheon was whether the aggregate contribution limit coupled with the individual contribution limit helps prevent quid pro quo corruption or whether it unjustifiably limits political speech. In the 2011-2012 election cycle, the plaintiff, Shaun McCutcheon, an Alabama businessman, had already contributed $33,088 to 16 candidates, but he wanted to contribute $1,776 to 12 more candidates, which would have pushed him over the aggregate limit. Given that every one of his contributions was below the individual limit, was it preventing any quid pro quo corruption to allow him to give $1,776 to eight more candidates, but not nine, 12, or 200? The obvious answer to that question …read more

Source: OP-EDS

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Jeb v. Hillary?

April 2, 2014 in Economics

By Michael D. Tanner

Michael D. Tanner

There is something distinctly troubling about the news this week that big Republican donors are trying to recruit former Florida governor Jeb Bush to run for president against Hillary Clinton in 2016. It has nothing to do with whether or not Bush would make a good president. By all accounts he was a very good governor — he scored a lifetime grade of B on the Cato fiscal scorecard — and he has some positive ideas for the future of the Republican party and the country. But do we really need the son of one president and brother of another (and grandson of a U.S. senator) to run against the wife of a former president?

Another Bush v. another Clinton? Maybe we should just pin on white or red roses and join the Yorkists or the Lancastrians.

What’s with this tendency to see elective office as a hereditary peerage?”

Jeb, of course, is not the only Bush considering his political options. His elder son, George P. Bush, is running for Texas land commissioner, widely considered a stepping stone to an eventual congressional or gubernatorial run. Nor are future generations of Clintons off the political radar. The Clintons’ daughter, Chelsea, recently told CNN that she is open to a future run for office, although she hasn’t decided yet what office she will seek. Oh, and let us not forget that Chelsea’s mother-in-law, former Pennsylvania representative Marjorie Margolies, is running to regain her congressional seat.

Speaking of Congress, Representative John Dingell (D., Mich.), currently the longest-serving member of Congress, and himself the son of a former congressman, announced that when he retires at the end of this term, his seat should naturally be inherited by his wife. Unsurprisingly, Debbie Dingell is considered the prohibitive frontrunner for the seat. This may be something of a comedown for Mrs. Dingell, however. The chairwoman of the Wayne State University Board of Governors had previously explored a run for the Senate, but backed off to avoid a primary fight with Representative Gary Peters. Still, it seems only fair — a Dingell has held that seat for the last 81 years.

We should have been finished with this hereditary-peerage thing back in 1776. In fact, Article I, Section 9, Clause 8 of the Constitution specifically says: “No title of nobility shall be granted by the United States.” Yet, according to one recent survey, 39 members …read more

Source: OP-EDS

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Hey, Eric Holder Discovers True Justice!

April 2, 2014 in Economics

By Nat Hentoff

Nat Hentoff

Ever since Eric Holder became our chief law enforcement officer, I have described him as being Barack Obama’s faithful vassal, who supports the president’s defiling of the Constitution. But recently, there has been a valuable exception: Holder’s call for reforming America’s prison system, a topic I have repeatedly covered.

As reported in multiple media outlets, the attorney general spoke to the American Bar Association in San Francisco last August. He was adamant about the state of America’s prisons:

“It’s clear … that too many Americans go to too many prisons for far too long, and for no truly good law enforcement reason. It’s clear, at a basic level, that 20th-century criminal justice solutions are not adequate to overcome our 21st-century challenges.

“And it is well past time to implement common sense changes that will foster safer communities from coast to coast” (justice.gov, Aug. 12, 2013).

According to The Guardian’s Dan Roberts and Karen McVeigh, the first of the administration’s common sense reforms would include keeping “minor drug dealers” from serving “mandatory minimum sentences that have previously locked up many for a decade or more” (“Eric Holder unveils new reforms aimed at curbing U.S. prison population,” Dan Roberts and Karen McVeigh, The Guardian, Aug. 12, 2013).

Last month, Holder elaborated on this plan in testimony to the U.S. Sentencing Commission, according to Teresa Welsh of U.S. News & World Report.

“The measure,” Welsh writes, “would reduce the base offense and sentencing associated with substance quantities involved in drug dealing crimes, reducing the average sentence by 11 months.”

So the average sentence is reduced, but not by much. What’s the big deal? Well, “the change would impact almost 70 percent of all drug trafficking offenders, as many who are imprisoned for such offenses are nonviolent criminals” (“Should Sentences for Nonviolent Drug Offenders Be Reduced?” Teresa Welsh, U.S. News & World Report, March 13).

Furthermore, small as this first step is, Welsh reports, “the Sentencing Commission estimates that if adopted, the proposal would reduce the Bureau of Prisons inmate population by 6,550.”

And dig this:

“The government spends almost $83 billion each year on a prison system that has grown by 700 percent in the last 30 years. U.S. prisons are 40 percent over capacity, and half of all inmates are serving time for drug-related crimes.”

Holder calls this a part of his “Smart on Crime” reforms, and he’s not alone in wanting to bring justice, of all things, to the boundless “War …read more

Source: OP-EDS

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President’s Celebration Skips Those Asking the Hard Questions

April 2, 2014 in Economics

By Michael D. Tanner

Michael D. Tanner

Talk about spiking the ball.

Speaking in the White House Rose Garden yesterday afternoon, President Obama declared flatly that the Affordable Care Act, which he proudly referred to as ObamaCare, “is doing what it’s supposed to do; it’s working.”

The president had reason to be pleased. According to the White House, 7.1 million Americans signed up, slightly more than the Congressional Budget Office had said was necessary for the law to work as planned. Considering the Web-site disaster and all other problems that we’ve seen so far, this represents a significant accomplishment.

The president basked in his success and castigated his critics, but took no questions. Perhaps that’s because some of them would have been hard to answer.”

New York was one of the best-performing states in the nation. More than 390,000 New Yorkers enrolled in plans via the state’s exchange, nearly double initial projections. Another 436,000 qualified for Medicaid, though it’s not clear how many were newly eligible due to the law. Connecticut also significantly exceeded projections, enrolling more than 74,000 people through the state’s exchange, and more than 105,000 in Medicaid. New Jersey, on the other hand, under-performed projections, enrolling just 74,000 people via the state exchange, and 145,000 in Medicaid.

But while the president basked in his success and predictably castigated his critics, he took no questions. Perhaps that’s because some of them would have been hard to answer. For instance:

How many new enrollees have paid their premiums? The numbers above include everyone who has “picked” a health plan, even if they haven’t yet paid for it, sort of like Amazon counting every item a shopper puts in their “cart” as a sale. Even Health Secretary Kathleen Sibelius concedes that only 80 percent of those who’ve picked a plan have actually paid the first month’s premium. Insurance executives also report that an another 3 percent to 5 percent paid once, but then stopped.

If these numbers hold, it would mean that just 5.6 million Americans (and 312,000 New Yorkers) really bought insurance through the exchanges.

How many were previously uninsured? Seven million insurance sign-ups doesn’t mean that 7 million more Americans with insurance. For starters, as many as 6 million Americans had to change their health plans because ObamaCare banned the policy they’d had before. Many of those whose plans got canceled bought new insurance through the exchanges, and are among the 7 million.

How many? Estimates …read more

Source: OP-EDS