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Washington's Biggest Strategic Mistake

April 18, 2014 in Economics

By Ted Galen Carpenter

Ted Galen Carpenter

The United States is on the brink of committing a cardinal sin in foreign policy: antagonizing two major powers simultaneously. There are frictions in bilateral ties with both Moscow and Beijing that have reached alarming levels over the past year or so. It is a disturbing development that could cause major geopolitical headaches for Washington unless the Obama administration takes prompt corrective measures and sets more coherent priorities.

Russia’s invasion and annexation of Crimea has created a deep freeze in relations that were already rather frosty. Although few knowledgeable Americans agreed with Mitt Romney’s assertion in the 2012 presidential campaign that Russia was the principal geopolitical adversary of the United States, there were surging sources of friction even before the onset of the Crimea crisis, including sharp disagreements over policy toward Syria and Iran. The Crimea episode has made matters dramatically worse, with Washington and its European Union allies imposing economic sanctions on Russia, and the Kremlin responding with (mostly symbolic) sanctions of its own. The language coming out of both Washington and Moscow is characterized by a hostility not seen since the end of the Cold War. U.S. officials ruminate about deploying troops to NATO members in Eastern Europe to discourage additional expansionist moves by Russia.Hawks in the U.S. foreign policy community openly advocate an even more provocative troop deployment, along with military aid, to Ukraine.

The United States is on the brink of committing a cardinal sin in foreign policy: antagonizing two major powers simultaneously.”

Washington’s relations with Beijing also have become noticeably more contentious. That point was highlighted during Secretary of Defense Chuck Hagel’s recent visit to China. A series of testy exchanges culminated with a pointed warning from Defense Minister Chang Wanquan that efforts to “contain” China would never succeed. Beijing has been increasingly irritated by U.S. stances on a variety of issues. Washington’s position regarding China’s territorial disputes with neighboring states in both the South China and East China seas is an especially prominent grievance. From Beijing’s perspective, the Obama administration has exhibited an unsubtle backing of Japan, the Philippines, Vietnam, and other rival claimants. The new security agreement between Washington and Manila is likely to further exacerbate Sino-U.S. tensions on territorial issues.

The simultaneous deterioration of U.S. relations with Russia and China is more than a little worrisome. It violates an important admonition that Secretary of …read more

Source: OP-EDS

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Game of Thrones and the Politics of Fantasy

April 18, 2014 in Economics

By Matt McCaffrey

The internet is filled with talk of the fourth season of HBO’s Game of Thrones. This is welcome news, as Game of Thrones probably offers economists more teachable moments than any show currently on the air (even House of Cards). Fans are probably familiar with its economic themes and strongly critical view of government, which have attracted the attention of many libertarians, including yours truly. But the show’s “politics without romance” approach has been catching on in other circles as well, and (shameless self-promotion) my own economic take has been featured by CNBC and NASDAQ.com.

But instead of using this post to explore themes from the show, I want to talk more generally about why I think it’s so effective in portraying the devastating reality of war, power, and government. The secret, in my opinion, is the fantasy setting. While it might seem counter-intuitive that an elaborate fictional world with so much supernatural activity could actually describe the real world, Game of Thrones works well because it seems so removed from our own experience.

There are many ways we could think about this, so I’ll stick to just a couple. First, fantasy worlds give us a place for our ideas to play. Maybe if we can’t yet make the real world more to our liking, we can create a fictional world to act as a kind of thought experiment in which to develop our ideas and share them. The possibility to create new worlds is one reason sci-fi and fantasy have long been home to ideas about liberty.

But I think there’s more to it than that. Fantasy can also strip away irrelevant and misleading details of the real world that cloud our thinking.

C.S. Lewis captures this idea perfectly in a 1956 essay:

The Fantastic… if it is used well by the author and meets the right reader, has the [following] power: to generalize while remaining concrete, to present in palpable form not concepts or even experiences but whole classes of experience, and to throw off irrelevancies. But at its best it can do more; it can give us experiences we have never had and thus, instead of ‘commenting on life,’ can add to it.

I especially like the idea of being both general and concrete, which sounds a lot like a description of economic theory. What Lewis is getting at is that fantasy, because it …read more

Source: MISES INSTITUTE

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Is Warren Buffett really an Austrian….

April 18, 2014 in Economics

By Mises Updates

Who enriches himself while talking a Keynesian game?  Jeff Deist offers a hypothesis:

http://www.economicpolicyjournal.com/2014/04/does-warren-buffett-talk-like.html

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Source: MISES INSTITUTE

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Per Bylund on Obamacare in the ‘Wall Street Journal’

April 18, 2014 in Economics

By Mises Updates

800px-Barack_Obama_reacts_to_the_passing_of_Healthcare_bill

Per Bylund’s column “What Sweden Can Teach Us About ObamaCare” is in today’s WSJ:

President Obama has declared the Affordable Care Act a success—a reform that is “here to stay.” The question remains, however: What should we expect to come out of it, and do we want the effects to stay? If the experiences of Sweden and other countries with universal health care are any indication, patients will soon start to see very long wait times and difficulty getting access to care.

Sweden is praised as a rare example of a socialist country that works. A closer look at its health-care system tells a different story.

The overall quality of medical services delivered by Sweden’s universal public health care consistently ranks among the world’s very best. That quality can be achieved by regulating treatments to follow specific diagnoses as well as by standardizing procedures. If ObamaCare regulations do this, the quality of American health care may not go down either.

Sweden’s problem is access to care. According to the Euro Health Consumer Index 2013, Swedish patients suffer from inordinately long wait times to get an appointment with a doctor, specialist treatment or even emergency care. Wait times are Europe’s longest, and Swedes dependent on the public-health system have to wait months or even years for certain procedures, or are denied treatment.

For example, Sweden’s National Board of Health and Welfare reports that as of 2013, the average wait time (from referral to start of treatment) for “intermediary and high risk” prostate cancer is 220 days. In the case of lung cancer, the wait between an appointment with a specialist and a treatment decision is 37 days.

This waiting is what economists call rationing—the delay or even failure to provide care due to government budgetary decisions. So the number of people seeking care far outweighs the capabilities of providers, translating into insurance in name but not in practice. This is likely to be a result of ObamaCare as well.

Rationing is an obvious effect of economic planning in place of free-market competition. Free markets allow companies and entrepreneurs to respond to demand by offering people what they want and need at a better price. Effective and affordable health care comes from decentralized innovation and risk-taking as well as freedom in pricing and product development. The Affordable Care Act does the opposite by centralizing health care, minimizing or prohibiting differentiation in pricing and offerings, and mandating consumers to purchase insurance. It …read more

Source: MISES INSTITUTE

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Scarcity, Monopoly, and Intellectual Property

April 18, 2014 in Economics

By Mises Updates

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David Gordon writes in today’s Mises Daily: 

Faced with a welter of arguments in conflict, what is the perplexed libertarian to do? Butler Shaffer’s superb monograph offers an easy way to unravel the IP puzzles. He starts from a fundamental principle basic to libertarianism and explains how the implications of this principle shed light on IP issues.

What is this principle? It is that rights stem from “the informal processes by which men and women accord to each other a respect for the inviolability of their lives — along with claims to external resources (e.g., land, food, water, etc.) necessary to sustain their lives.” (p.18) The “informal processes” that Shaffer mentions proceed without coercion. In particular, law and rights do not depend on the dictates of the state, an organization that claims a monopoly over the legitimate use of force in a territory.

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Source: MISES INSTITUTE

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Austrian Research at the University of Angers

April 18, 2014 in Economics

By Peter G. Klein

PeterPhilippGuido

The University of Angers, France has become an excellent place for doctoral work in Austrian economics, thanks to the leadership of Guido Hülsmann. Several top younger Austrian scholars such as Eduard Braun, Amadeus Gabriel, and Matt McCaffrey ‎– all former Mises Summer Fellows — received their PhDs under Professor Hülsmann’s supervision. Senior scholars such as Jeff Herbener, Shawn Ritenour, and myself are frequent visitors.

This week I was privileged to participate in a research seminar at the University’s GRANEM research center, along with Hülsmann and Philipp Bagus‎ of Rey Juan Carlos University in Madrid, on financial markets and institutions. Bagus presented a paper on the government bailout of the Spanish banks, and I presented a paper on the US private equity sector and it’s relationship to entrepreneurship, with Hülsmann as moderator and discussant.

Look for more exciting activities at Angers in the years to come.

…read more

Source: MISES INSTITUTE