You are browsing the archive for 2014 April 07.

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Sen. Rand Paul Appears on Fox's On The Record with Greta Van Susteren – April 4, 2014

April 7, 2014 in Politics & Elections

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Source: RAND PAUL

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Kentucky, Connecticut Senators Offer Friendly Wager on NCAA Championship Game

April 7, 2014 in Politics & Elections

Sens. Rand Paul and Mitch McConnell (Ky.) today announced a friendly wager with Sens. Richard Blumenthal and Chris Murphy of Connecticut on the outcome of tonight’s NCAA basketball Championship game, the University of Kentucky’s Wildcats against the University of Connecticut’s Huskies. The stakes from the wager are a selection of Kentucky Derby-Pie

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Why Keynesians Don’t Understand the Macro Economy

April 7, 2014 in Economics

By John P. Cochran

Frank Hollenbeck, in “Why Keynesian Economists Don’t Understand Inflation”  argues that a fundamental shift in macro theorizing, shifting from the transaction version of the equation of exchange to the income form  of the equation, particularly in theorizing about the demand for money is wrong theory and hence leads to bad policy and a inherent inability to understand inflation and its consequences properly.  He summarizes:

Yet, the original, non-Keynesian quantity theory of money clearly shows that the demand for money is to conduct all possible transactions, and not just those that make up nominal income. Money is linked to prices of anything that money can buy, consumer goods, stocks, bonds, stamps, land, etc. From this, an average price cannot be measured since appropriate weights are not obtainable. The use of the simplified, Keynesian version in economic textbooks and by the professional economist has caused immense damage. When your theory is wrong, your policy prescriptions will likely also be wrong.

One of the few textbooks to highlight problems with macroeconomic modeling based on the income form of the quantity equation’s was my mentor Fred R. Glahe’s Macroeconomics Theory and Policy. The discussion is around p. 221 in the linked 3rd edition. This edition was one of the few (only) texts that had a section on Austrian business cycle theory. The text was also one of the best in highlighting hidden assumptions in Keynesian analysis.

The problems with the simplified Keynesian version is foundational, and is the result of basing macroeconomics on national income product concepts as Hayek attempted to show beginning in the late 1920s.

Fred and I discuss the implications of the use of the income form of quantity equation (almost all ‘modern’ macro) in our book The Hayek-Keynes Debate pages 114-117.

We conclude:

These models [Keynesian and modern macro] focus on aggregates. Hayek’s model [capital structure] cannot be expressed or understood in terms of such aggregates. All the key features of Hayek’s analysis are absent in models that use the national income concept as a starting point for macroeconomic analysis.

Roger Garrison (Natural Rates of Interest and Sustainable Growth) provides an excellent discussion highlighting the “variations on a the theme” (ABCT) that was evident in the two most recent boom-bust cycles, the dot.com and housing, that he attributes to the Fed’s ‘learning by doing’ policy of the Great Moderation. He highlights how the use of aggregate data lead Fed policy makers to have a …read more

Source: MISES INSTITUTE

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The Surveillance State in Socialist Romania

April 7, 2014 in Economics

By Matt McCaffrey

800px-Flag_of_Romania_(1965-1989).svg

The BBC is running a tragic but fascinating article about political oppression under the Ceausescu regime in socialist Romania. The article tells the story of Carmen Bugan, whose father, Ion Bugan, was repeatedly spied on, arrested, and tortured for political dissent. Since 1999, the files of the Romanian secret police, the Securitate, have been available to those who were investigated during the socialist period, and Carmen has uncovered the files kept on her family. In the process, she has revealed publicly the true extent of the surveillance and suffering her family (and many other Romanians) endured.

Like every socialist country, Romania under Ceausescu failed economically. As Carmen Bugan describes it, “This was a Romania of food shortages, frequent power cuts, and ferocious reprisals for any form of dissent… Evening bread queues often ended in fist fights.” In order to quell any calls for reform, his government brutally suppressed any opposition, including that of Ion Bugan. Bugan agitated for political reform and attempted to flee the country, but more than once was arrested and sentenced to hard labor.

Part of the sentence was a five-month period of torture by solitary confinement and starvation while wearing 45kg of chains day and night, in the “special” wing of the prison at Alba Iulia… My father’s own account of this period is hair-raising: he was fed once every two days, and allowed to wash three times in the entire period he was held there.

Even after being released from prison, the Securitate constantly spied on the Bugan family using microphones placed throughout their home. The family’s activities were recorded in great detail, showing how complete the surveillance was:

There are records of dreams we recounted to each other in the mornings. The transcriber knew us so well, he or she was able to read and duly note our moods. Some even took sides in family arguments, noting on the margins of the transcripts who they thought was right. It’s like having had a one-sided relationship with these invisible broadcasters of our tormented souls.

One theme that emerges from the Bugan family story is that in addition to all the economic problems and human rights abuses, socialism also breaks down some of the most fundamental social bonds between individuals. For instance, family units are destroyed, as when Bugan was forced to divorce his wife in 1985, for fear that his political views might “corrupt” his spouse and …read more

Source: MISES INSTITUTE

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Bankers Help Crush Cannabis Businesses

April 7, 2014 in Economics

By Ryan McMaken

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Since large banks are more or less adjuncts of the federal government that live off the sweat of taxpayers, all the while whining about how tough they have it, who can be surprised that large banks like Wells Fargo have been enthusiastic in their efforts to crush clients who dare do business with legal cannabis merchants? Notes the Denver Post:

The risk made banks, including Wells Fargo, give commercial clients an ultimatum: Drop the marijuana-related tenants of property financed with bank funds, or pay up the entirety of the loan.

“A couple of the bigger banks have a scorched-earth policy, moving immediately to eviction or simply calling the note, with no courtesy to allow them to do anything else,” said Robert Frichtel, a former commercial mortgage broker who is CEO of Advanced Cannabis Solutions in Colorado Springs.

Fortunately, as described in The Post article, smaller sources of capital have moved into the market eager to capitalize on a booming (and legal) industry in Colorado (which I describe here). If the United States had an actual free market economy, huge mismanaged dinosaurs like the big banks would have been liquidated years ago, or at least significantly shrunk in size. Instead, they went to the public trough and stole a couple trillion dollars from the taxpayers. Naturally then, they show no signs of life when it comes to the sort of entrepreneurship necessary to deal with a renewed cannabis industry that, unlike the banking sector, actually strives to provide good service to customers.

Mind you, I understand that the banks are fearful because they are subject to so much federal regulation, and could easily have their charters revoked if they did not play ball. As with so many industries, the feds have the banks over a barrel. But this relationship is made worse by the fact that the fiscal health of banks is reliant not on their customers, but on the cozy cronyism that keeps government favors coming their way. Banks have no interest in pushing back even the slightest bit in the continued regulatory war on drugs through the banking sector because the banks would rather just take money from their customers by force (via the treasury) than have to earn it.

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Source: MISES INSTITUTE

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How Right-Wing Loons and Pro-Gun Nuts Blame Everything But Guns for Mass Shootings

April 7, 2014 in Blogs

By Timothy Johnson, MediaMatters

Not to Rush Limbaugh, Mike Huckabee, Ted Nugent and pals: Mass stabbings are extremely rare.


When a mass shooting occurs, conservative media rush to blame mental health, video games, a lack of armed people present, and even liberal values — anything but the fact that the shooter was able to get a gun.

But the single proximate factor in all mass shootings, and in all gun violence really, is that it is easy for dangerous people to access high-powered firearms. Lack of access to firearms typically makes it difficult for would-be mass murderers to carry out their plans. For instance, experts say mass stabbings are extremely rare in the United States. To the contrary, 69 percent of all homicides are committed with a gun. Of 37 public mass killings since 2006, 33 involved firearms, while the Boston Marathon bombings, an incident involving a car, and two cases of arson accounted for the other four incidents.

Furthermore, academic research has linked the easy availability of firearms to homicide. According to numerous studies, “where there are more guns, both men and women are at higher risk for homicide, particularly firearm homicide.” Compared to other high income nations which typically more strongly regulate the availability of firearms, the United States' gun homicide rate is 19.5 times higher, leading to an overall homicide rate that is 6.9 times higher. Research has also shown, “across developed countries, where guns are more available, there are more homicides. These results often hold even when the United States is excluded.”

Following the April 2 shooting at Fort Hood that left three victims dead and 16 others wounded, conservative media have refused to acknowledge the role of easy access to firearms in shootings and have instead claimed mass shootings are caused by video games, mental health problems, the “culture war,” and by a deficiency in the number of firearms carried by the general public.

All of these claims are canards. The claim that there is a causal relationship between playing video games and future violence, including mass shootings, has been debunked by academic research. While it is important to limit firearms access for …read more

Source: ALTERNET

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US Supreme Court Endorses Involuntary Servitude

April 7, 2014 in Economics

By Mises Updates

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By William Norman Grigg 

A slave is somebody compelled to provide service to another. Elane Huguenin, a wedding photographer from New Mexico, was arraigned before that state’s “human rights” soviet for politely declining to provide her services to a lesbian couple planning a “commitment ceremony” (the state doesn’t recognize same-sex marriage).

The couple had no difficulty finding another photographer willing to accept payment for that service, and thanks to their punitive impulses – and the totalitarian “public accommodations” law in that state – they were able to use money extracted from Huguenin in the form of fines in order to pay for their photographs.

In declining the couple’s business, Elane Huguenin did not injure or defraud anybody. The same is true of Antonio Darden, a gay hairdresser from Santa Fe who earned nation-wide publicity a couple of years ago when he announced that he would not accept business from New Mexico Governor Susana Martinez because she is an opponent of same-sex marriage. Both Huguenin and Darden sought to exercise their property rights by declining proposed business transactions. Only Darden was permitted to do so, because he – unlike Huguenin – belongs to a “specially protected” class.

In its ruling upholding the actions of New Mexico’s “human rights” soviet, the State Supreme Court claimed that the lesbian couple had a right “to obtain goods and services from a public accommodation without discrimination on the basis of … sexual orientation.” This assumes that business owners like Huguenin have a duty to provide such services – and no right to decline participation in that transaction. In other words, involuntary servitude – despite being explicitly banned by the 13th Amendment – is justified in the service of “anti-discrimination” policy.

Attorneys on behalf of Huguenin appealed that ruling to the US Supreme Court, contending that it violated the free speech and religious liberty “guarantees” of the First Amendment – which it manifestly did. Huguenin’s legal counsel could have argued that the state’s Human Rights Act — which was amended in 2003 to include “sexual orientation” within the protected categories — represents a wholesale violation of property rights. This argument would only find traction, unfortunately, in a society where property rights are properly understood.

Huguenin’s counsel could have pointed out that the preferential treatment of property owners such as Mr. Darden – who is allowed to discriminate against some customers on ideological grounds – violates the principle of equal protection under …read more

Source: MISES INSTITUTE

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Chris Casey on Power Trading Radio

April 7, 2014 in Economics

By Mises Updates

Last Wednesday’s Mises Daily author Chris Casey discusses deflation, prices and markets on Power Trading Radio.

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Source: MISES INSTITUTE

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Attention Drone Operators: You Could Be Killing This Child!

April 7, 2014 in Blogs

By Janet Allon, AlterNet

Artist collective installs giant poster in heavily droned area of Pakistan.


This is one of those, “a picture is worth a thousand words” stories.
 
An artists collective has installed a massive poster of a child in an area of Pakistan that is said to be heavily bombed by drone operators, according to #NotABugSplat. The Twitter handle and Facebook page refers to a particularly insensitive piece of military jargon, “bug splat,” that is used to describe drone kills. Apparently, a human body looks like a bug splat through the grainy images drone operators view.
 
According to the Facebook page, the poster was unfurled in the “Khyber Pukhtoonkhwa region of Pakistan, where drone attacks regularly occur. Now, when viewed by a drone camera, what an operator sees on his screen is not an anonymous dot on the landscape, but an innocent child victim’s face.” The poster is said to be large enough to be captured by satellites collecting landscapes for online mapping sites.
 
Artists associated with French artist JR’s ‘Inside Out’ movement traveled to the remote province, and with the help of “highly enthusiastic locals, unrolled the poster amongst mud huts and farms,” according to the Facebook page. “It is their hope that this will create empathy and introspection amongst drone operators, and will create dialogue amongst policy makers, eventually leading to decisions that will save innocent lives.”
 
According to the Foundation for Fundamental Rights, the child in the poster lost both her parents and two young siblings in a drone attack.

 

 

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Source: ALTERNET

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What Education Reformers Can Learn from Kosher Certification

April 7, 2014 in Economics

By Jason Bedrick

Jason Bedrick

Can we have standards without the government imposing them?

Writing in Education Week, school reform champion Robert Pondiscio recently offered a thoughtful and thought-provoking critique of the open letter on educational choice and accountability issued by the Cato Institute, the Heritage Foundation, the Friedman Foundation for Educational Choice, the Heartland Institute, and the Center for Education Reform. The letter made the case that where parents are able to choose their children’s schools, uniform, government-imposed standards and tests are both unnecessary (because the schools are directly accountable to parents who have the option to leave) and counter-productive (because a uniform standard stifles diversity and innovation).

Pondiscio generally favors educational choice, agreeing that “markets have proven more effective than mandates in improving outcomes for low-income children,” but expressed concern about an education system that lacked any standards:

I have insisted I’m invested only in outcomes, not systems, so I should simply favor what seems likely to achieve the best results for the most kids. But I find myself reluctant to advocate for a standards-less system. [emphasis added] Look, I want kids to learn how to read. As I quipped to Andrew [Coulson of the Cato Institute], I don’t want to be the one to say, “Too bad, kid. Your parents chose badly. I’ll tell you how the free market works as soon as you’re done cutting my lawn.”

This concern is understandable but misplaced. The lack of a government-imposed standard does not imply the lack of any standards. Rather, it leaves space for competing standards. An instructive example of this is private kosher certification.

Market forces create incentives that give private certification numerous advantages over government-imposed accountability regimes.”

A Brief Recent History of Kosher Certification

As with education, there is information asymmetry between providers and consumers. Providers know much more about the quality (or kashrut) of their products than consumers, who must therefore rely on trust or some sort of regulation or certification.

Old World kosher certification was highly-centralized in each community and often backed by the government, but when Jews immigrated to America en masse, they found that such a system was unworkable in a land of free markets, mass production, and religious liberty. During the 19th and early 20th centuries in America, it’s likely that half or more of the meat sold as “kosher” was actually non-kosher. The Jewish community in New York turned to the government to solve this problem, and the state responded …read more

Source: OP-EDS