You are browsing the archive for 2014 April 09.

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What the State Fears

April 9, 2014 in Economics

By Mises Updates

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By Murray Rothbard

From Anatomy of the State:

What the State fears above all, of course, is any fundamental threat to its own power and its own existence. The death of a State can come about in two major ways: (a) through conquest by another State, or (b) through revolutionary overthrow by its own subjects?in short, by war or revolution. War and revolution, as the two basic threats, invariably arouse in the State rulers their maximum efforts and maximum propaganda among the people. As stated above, any way must always be used to mobilize the people to come to the State’s defense in the belief that they are defending themselves. The fallacy of the idea becomes evident when conscription is wielded against those who refuse to “defend” themselves and are, therefore, forced into joining the State’s military band: needless to add, no “defense” is permitted them against this act of “their own” State.

In war, State power is pushed to its ultimate, and, under the slogans of “defense” and “emergency,” it can impose a tyranny upon the public such as might be openly resisted in time of peace. War thus provides many benefits to a State, and indeed every modern war has brought to the warring peoples a permanent legacy of increased State burdens upon society. War, moreover, provides to a State tempting opportunities for conquest of land areas over which it may exercise its monopoly of force. Randolph Bourne was certainly correct when he wrote that “war is the health of the State,” but to any particular State a war may spell either health or grave injury.

We may test the hypothesis that the State is largely interested in protecting itself rather than its subjects by asking: which category of crimes does the State pursue and punish most intensely? Those against private citizens or those against itself? The gravest crimes in the State’s lexicon are almost invariably not invasions of private person or property, but dangers to its own contentment, for example, treason, desertion of a soldier to the enemy, failure to register for the draft, subversion and subversive conspiracy, assassination of rulers and such economic crimes against the State as counterfeiting its money or evasion of its income tax. Or compare the degree of zeal devoted to pursuing the man who assaults a policeman, with the attention that the State pays to the assault of an ordinary citizen. Yet, curiously, the State’s openly assigned …read more

Source: MISES INSTITUTE

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Economic Sanctions Not Key Cause of Russia’s Possible Recession

April 9, 2014 in Economics

By Mises Updates

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Frank Shostak writes in today’s Mises Daily: 

According to commentators, sanctions imposed by the US and the European Union are pushing Russia toward a recession. However, we hold that some key Russian economic data have been displaying a weakening prior to the annexation of the Crimea to Russia. This raises the likelihood that sanctions might not be the key factor for an emerging recession…

Now, to counter a further weakening in the ruble against the US dollar, the Russian central bank has raised the seven day repo rate by 1.5 percent to 7 percent. The price of the US dollar in ruble terms rose to 36.3 in March from 30.8 rubles in March last year — an increase of 18 percent.

…read more

Source: MISES INSTITUTE

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Audio: Thornton Explains the Crack-Up Boom

April 9, 2014 in Economics

By Ryan McMaken

Interviewed by host Alan Butler, Mark Thornton explains why the Crack-Up Boom phase of a fiat money collapse is one of the scariest economic phenomena in human history.

Listen here. 

…read more

Source: MISES INSTITUTE

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Republicans and Refundable Tax Credits

April 9, 2014 in Economics

By Mises Updates

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By Laurence Vance

The so-called Bush tax cuts were, unfortunately, set by Republicans to expire at the end of 2010. Although they were extended, with modifications, and then extended again, with more modifications, this Republican blunder has led—like so many of their other actions—to an increase in the welfare state.

The Bush tax cuts, the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA), added a 10 percent tax bracket, set the tax rates of the others at 15, 25, 28, 33, and 35 percent, increased the child credit to $1,000, lowered the long-term capital gains and qualified dividend tax rates to 15 percent, increased the Section 179 expense deduction to $250,000, gradually eliminated the “PEP and Pease” personal exemption and itemized deduction reductions, and gradually eliminated the estate tax.

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (TRUIRJCA) extended most of these provisions. Although the estate tax was revived, the Section 179 expense deduction was extended and increased.

But after this expired at the end of 2012, Congress passed, with the help of Republicans, the American Tax Relief Act of 2012. The six tax brackets were made permanent, but for those making over $400,000 a year ($450,000 for married couples), the top marginal tax rate increased to 39.6 percent. Additionally, the estate tax rate increased, the tax rates on long-term capital gains and dividends were raised on higher-income taxpayers, and the personal exemption and itemized deduction reductions were reinstated. But the worst thing about the American Tax Relief Act is its expansion of refundable tax credits.

Tax deductions reduce the amount of income subject to tax. Their brothers, tax credits, reduce the amount of income tax owed. Since there is no chance whatsoever—as long as Democrats and Republicans star in the dog and pony show that is the U.S. government—that the income tax will ever be eliminated, tax deductions and tax credits are important for Americans who want to keep more of their money in their pockets and out of the hands of Uncle Sam. Tax deductions and tax credits, along with their cousins tax breaks, tax exemptions, tax exclusions, tax incentives, tax loopholes, tax avoidance schemes, and tax shelters, are not subsidies that have to be “paid for.” It doesn’t matter what the deductions and credits are for, how much they are, whom they benefit, or why they were instituted, they are always …read more

Source: MISES INSTITUTE

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University of Manchester Crushes Students’ Attempt to Study Austrian Econ

April 9, 2014 in Economics

By Ryan McMaken

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From The Financial Times:

The international financial crisis has sparked calls for a radical rethink of economics teaching, with critics calling for professors of the dismal science to pay more attention to finance and history. But students from the birthplace of the Industrial Revolution have had their hopes for a course on financial crashes dashed after the University of Manchester refused to put it on next year’s syllabus.

A group of students, the Post-Crash Economics Society, had devised a course – Bubbles, Panics and Crashes: an Introduction to Alternative Theories of Crisis – with the support of some of Manchester’s academic staff, as a module for third-year students at the university, a member of the prestigious Russell Group.

Last week, after months of campaigning and petitioning of fellow students, the economics department rejected it. “We were all very shocked and angry at the decision,” said Joe Earle, a member of the society.

The reading list proposed by the students included articles from so-called Austrian school economists and included papers by staff at the Bank for International Settlements, the so-called central bankers’ bank, who were among the few to warn of the dangers building up in the global financial system before the Lehman Brothers’ collapse.

“If you look at the reading list, it’s not wildly radical – it’s balanced. But in the standard undergraduate course you wouldn’t see any of that. It just goes to show how narrow the curriculum is,” said James Meadway, an economist at the New Economics Foundation think-tank. “There is a complete failure to admit that there’s something fundamentally wrong with economics, and that it led to the crisis being missed in 2008.”

Read the article. 

…read more

Source: MISES INSTITUTE

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Former Inmates Learning to Avoid Going Back to Their Cells

April 9, 2014 in Economics

By Nat Hentoff

Nat Hentoff

At last, more emphasis — particularly from Attorney General Eric Holder — is being placed on how to reduce the large numbers of inmates in our overflowing prisons. Once released, these people are often re-arrested, and then locked up as criminals again.

In a lead editorial last month, The New York Times revealed what many of us didn’t know, that “in 2013, about 30,000 federal prison inmates were released to more than 200 halfway houses around the country. These facilities — where an inmate can serve up to the last year of his or her sentence — are meant to ease the transition back into society by way of employment and housing assistance, drug treatment and other programs that make it less likely an inmate will end up reoffending and returning to prison” (“Halfway Back to Society,” The New York Times, March 30).

“Preventing recidivism,” the Times editorial argues, “should, of course, be a central goal of any correctional system.”

The problem, though, is that “too many halfway houses are understaffed, poorly supervised and generally ill prepared to do that job, and as a result the men and women who pass through them often leave them no better off.”

But the attorney general — long dismissed by many critics, including me, as a mere minion of his dictatorial boss — is actively involved in bringing, of all things, human rights to our prison system.

The Times editorial goes on: “On March 24, Attorney General Eric Holder Jr. took a step in the right direction by announcing new requirements for federally financed halfway houses — the most recent example of his aggressive push for reform across the criminal justice system.”

Furthermore: “Starting in early 2015, halfway houses must provide more rigorous and standardized cognitive-behavioral treatment for inmates with mental health or substance abuse issues, both of which are rampant in prison populations.”

How many congressional and presidential candidates will support this in 2016?

In February, I wrote that “the Brennan Center for Justice at New York University School of Law reported on Holder’s ‘great step forward on restoring voting rights’ … the attorney general ‘urged states to restore voting rights to people of past criminal convictions’ ” once they had “ ‘completed probation, parole and paid all fines’ ” (my column, “Obama’s Attorney General Americanized (in Part),” cato.org, Feb. 19).

And last week, I reported on Holder’s “Smart on Crime” initiative, which he elaborated on during his March testimony before the U.S. …read more

Source: OP-EDS

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HealthCare.BigGov

April 9, 2014 in Economics

By Michael D. Tanner

Michael D. Tanner

The Obama administration is now entering its second week of celebration over the 7.1 million Americans who signed up for insurance through Obamacare’s exchanges. The administration also claims an additional 8 million Medicaid enrollees and 3 million young people who can now stay on their parents’ policies. Those numbers have been widely debunked, of course — the number of newly insured Americans is probably much closer to 3 to 4 million total.

But beyond the debate over top-line numbers, there remains something troubling about the administration’s celebration of “success,” for the Affordable Care Act will dramatically expand Americans’ dependence on government.

Obamacare is a wealth-transfer program with health insurance attached.”

Start with those 7.1 million signing up through exchanges. When critics point out that the policies available on the exchanges are often more expensive than many policies sold before Obamacare, ACA advocates point to subsidies that reduce what many enrollees actually pay. In fact, according to the Center for Medicare and Medicaid Services and outside organizations such as the Kaiser Family Foundation, somewhere in the range of 80 percent, and as many as 83 percent, of those enrolling received a subsidy to help pay for their insurance. That could amount to some 5 to 5.5 million people, depending on how many of those who selected plans actually pay premiums.

And it’s not as though those subsidies are going only to the poor, who otherwise could not afford insurance. Although more generous to those earning 250 percent of the poverty line ($58,875 for a family of four), some level of subsidy is available up to 400 percent of poverty ($94,200 for a family of four). In fact, taking into account various income disregards, some families with even higher incomes could receive a subsidy. The Congressional Budget Office estimates that as many as 700,000 people with incomes more than three times the poverty level will receive a subsidy next year.

Subsidies, of course, do not actually reduce the cost of those insurance plans, but simply shift part of that cost from the purchaser to taxpayers. Moreover, since the Rand Corporation estimates that it’s possible as few as 858,000 enrollees were previously uninsured, millions of Americans who were paying for their own insurance have now moved onto the government dole. While it would generally be unfair to blame people for taking advantage of what is being offered to them, especially …read more

Source: OP-EDS