You are browsing the archive for 2014 May 19.

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Two Cheers for (Direct) Democracy

May 19, 2014 in Economics

By Joseph Salerno

As Jeff Deist pointed out in an earlier post, in a national referendum over the weekend, the Swiss heroically and overwhelmingly rejected what would have been the world’s highest minimum wage. Switzerland currently has no minimum wage. The result was hardly unexpected, however, because the “Decent Wage” initiative was staunchly opposed by big business and government, as well as by farmers, small business owners, and employer groups.

A less publicized initiative that received a heart-warming rejection in the referendum, although by a much smaller margin, was the Swiss federal government’s plan to purchase 22 Gripen E fighter jets at a cost of $3.5 billion from Saab, the Swedish defense firm. The deal had been in the works for 6 1/2 years and was thought to be a done deal — at least according to the markets. Saab AB fell the most in 10 months, declining by 7 percent to an intraday low this morning before recovering to a 3.7 percent decline at midday in Sweden. The Swiss public ignored the government’s heavy lobbying in favor of the initiative, which sought to stoke fears of a “security gap” in the defense of its air space. The mechanical and electrical engineering trade group, Swissmem, also gravely warned that rejection of the initiative would cause a prospective loss of 2 billion francs for the ”Swiss economy,” i.e., the crony capitalist firms that compose the trade group and had already negotiated 500 contracts with Saab.

Perhaps part of the reason that the Swiss were unmoved by this government-business hysteria was because of an incident that occurred in February, when French and Italian air forces forced the landing of a highjacked Ethiopian Airlines Enterprise plane in Geneva. The French and Italian jets were needed, you see, because the Swiss air force does not operate outside of business hours.

Although I am not a proponent of democracy — or for that matter government — of any kind, occasional national referendums in the U.S. would certainly throw a good and well deserved scare into our own political and crony capitalist elites, and may even rein in their depredations on citizens’ lives and property.

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Source: MISES INSTITUTE

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Ralph Waldo Emerson was Right…

May 19, 2014 in Economics

By Jeff Deist

waldo

And so is Arthur Brooks: College graduates today cannot afford to be “City Dolls”!

“A sturdy lad from New Hampshire or Vermont, who in turn tries all the professions, who teams it, farms it, peddles, keeps a school, preaches, edits a newspaper, goes to Congress, buys a township, and so forth, in successive years, and always like a cat falls on his feet, is worth a hundred of these city dolls” (from Self Reliance).

But why is Mr. Brooks, head of the (ahem) American Enterprise Institute, making this case in the New York Times- the bastion of overgrown, immature, utterly provincial city types?  It’s hilarious when milquetoast conservatives like Brooks try to curry favor with the supposed intelligentsia.  Note that he’s savaged in the comments by NYT readers who are utterly hostile to the mere suggestion that young people work hard and take responsibility for their actions.

Here’s a bold claim: if you work in a DC think tank and/or consider the NYT a serious outlet for news, commentary, and culture, you’re probably a City Doll (albeit perhaps an aging, Baby Boomer version).

By the way, how long has it been since AEI had any interest in actual business “enterprise”?   I guess building bombs and invading countries counts?

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Source: MISES INSTITUTE

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Hindu Nationalists Ascendant in India: Will Narendra Modi Be Prime Minister of All Indians?

May 19, 2014 in Economics

By Doug Bandow

Doug Bandow

For years India has disappointed expectations. Tagged as the next great power preparing to challenge China and eventually America, India instead has lagged economically, stagnated politically, and battled religiously. Now Narendra Modi’s Bharatiya Janata Party (BJP) has won a stunning political victory. India’s future depends on Modi’s ability to transcend his sectarian roots and govern on behalf of all Indians.

India achieved political independence in 1947, when the British colony was divided into largely Hindu India and mostly Muslim Pakistan. Twelve million people abandoned their homes and hundreds of thousands of them died in the process. Nevertheless, many religious minorities remained behind. For instance, India’s Muslim population runs roughly 177 million, the 3rd largest on earth — behind only Indonesia and Pakistan.

Throughout the Cold War the Delhi government kept its people poor by mismanaging the economy. Indian officials followed Stalinist economic nostrums to develop and depended on foreign aid to make ends meet. Politics was dominated by the dynastic India National Congress Party, which treated the system as the property of the Nehru-Gandhi family. Eventually change came to India: the Congress Party began economic reforms and the BJP broke the Congress political monopoly.

India is a secular republic in which freedom of religion is formally protected. However, legislation authorizes government interference in the name of preventing conduct “promoting enmity,” undermining “harmony,” intending to “outrage religious feelings,” insult “religious beliefs,” and more. In these cases, noted the State Department’s report on religious liberty, Delhi restricts “minorities’ freedom of speech and freedom of assembly.” Moreover, 7 of 28 states have passed anti-conversion laws, which target proselytizing.

The Indian people need more opportunity, not more dependency.”

Of particular concern is the government’s inability or unwillingness to combat religious violence and prosecute those responsible. Explained the U.S. Commission on International Religious Freedom: “Despite the country’s status as a pluralistic, secular democracy, India has struggled to protect minority communities or provide justice when crimes occur due to a lack of political will, political corruption, and religious bias by government officials. This exacerbates the climate of impunity that already exists in the country.”

Much violence occurs between the two largest groups, Hindus and Muslims, but other religious minorities also are targeted. In 2007 and 2008 in the state of Odisha (formerly known as Orissa) rioting Hindus murdered scores of Christians, forced thousands to flee, and destroyed many homes and churches. Mobs even torched a Christian …read more

Source: OP-EDS

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Leszek Balcerowicz Transformed Poland through an Embrace of Economic Freedom

May 19, 2014 in Economics

By James A. Dorn

James A. Dorn

The architect of Poland’s transition from Soviet-style central planning to a market economy will receive the prestigious Milton Friedman Prize for Advancing Liberty in New York City on May 21. The biennial $250,000 prize awarded by the Cato Institute since 2002 recognizes individuals who have made outstanding contributions to the spread of economic and personal freedom.

At the beginning of 1989, Leszek Balcerowicz was a young 42-year-old economist who had earned a Ph.D. at the Central School of Planning and Statistics (CSPS) in Warsaw and had been a member of the Polish United Workers Party (he left the PUWP in 1981). He had never held any leadership positions and had no thoughts of entering politics. Indeed, he expected Soviet dominance to last and its institutions of single-party rule and tight control of economic life to persist.

That all changed when Solidarity gained legal status in April 1989 and Tadeusz Mazowiecki, Poland’s designated prime minister in the first post-communist government, asked him to be his “Ludwig Erhard” in late August 1989. Balcerowicz accepted and became deputy prime minister and minister of finance in September. (Just a year before, he had spent several months in West Germany studying Ludwig Erhard’s reforms of 1948, which liberalized prices, ended shortages, and stabilized the currency.)

Earlier in his studies, Balcerowicz had read Ludwig von Mises and F. A. Hayek on the “socialist calculation debate,” and he came to recognize the importance of private property rights and free markets for generating rational prices. He saw the experiment with state ownership and planning as a tragic failure and recognized the importance of economic freedom for improving people’s lives.

The essence of the “Balcerowicz Plan” was rapid stabilization, liberalization, and institutional change to rein in the state and widen the scope of individual freedom.”

Balcerowicz formed an informal group of economists interested in reform while he was at the CSPS’s Institute of Marxism and Leninism in 1978–80. The “Balcerowicz Team” initially proposed working within the political constraints under the Communist regime to try to improve efficiency by introducing more competition. After martial law was imposed in December 1981, his group discussed more radical reforms — but as a “hobby” not a realistic blueprint.

When the moment came for fundamental reform, Balcerowicz was ready. He already had a vision of what steps were necessary to make the transition from planning to the market, and he had a …read more

Source: OP-EDS

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Recalling the Reagan-Kemp Vision

May 19, 2014 in Economics

By Richard W. Rahn

Richard W. Rahn

What is the Republican Party’s vision for America? You may have a hard time answering other than “not President Obama and his policies.”

Most Republicans plan to run their fall campaigns focusing on the Obama scandals — admittedly a target-rich area — with scandals involving Obamacare, Benghazi, the Internal Revenue Service and Veterans Affairs. All of this is not a vision of the future, though. It is hard to build a consensus — but smart, strong-minded individuals in the past have been able to articulate a vision that attracted not only the public but other politicians. Ronald Reagan accomplished this, and he was fortunate to have a visionary economic evangelist by his side who helped shape much of the Reagan program and became its principal salesman. His name was Jack Kemp — who passed away five years ago.

The nation’s current pessimistic mood calls for rational and optimistic candidates like Ronald Reagan and Jack Kemp.”

Kemp later sought the presidency, but it escaped his grasp. As a former professional football quarterback, he was better at formulating a winning strategy and passing the ball than scoring himself. This past Friday, the Jack Kemp Foundation held a forum at the Lincoln Cottage in Washington on “The Future of the American Idea.” The many noted speakers reminded us that Jack (before Newt Gingrich) was the Republican Party’s and, in many ways, the nation’s, leading idea man.

In the 1970s as a junior member of Congress, he sought to identify the solutions to the Carter “malaise” of no-growth and high inflation. He found the solution in the writings and speeches of two remarkable economists — Bob Mundell (who went on to win a Nobel Prize) and Art Laffer (of the Laffer Curve fame). Their prescription was major marginal tax rate cuts to spur economic growth and sound money — and if not a return to gold, at least a turn-off of the monetary flood — to stop inflation. Kemp, a most energetic and articulate speaker with the enthusiasm of a revival preacher, sold the vision wherever and whenever he was allowed to speak. Reagan agreed with the tax program and largely adopted it as his own. Reagan would quip to us young economists that he did not have to unlearn Keynesian economics, for he “had obtained his degree in economics before Keynes wrote his book.”

Jack Kemp was obsessed with economic growth. He correctly saw it as the major solution to the lack of opportunity that many young people, and …read more

Source: OP-EDS

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The Living Wage Movement Suffers a Setback

May 19, 2014 in Economics

By Jeff Deist

Swiss flag

Thankfully the wise Swiss recently voted 76% against an initiative to impose the highest minimum wage in the world, thus slowing momentum for a growing worldwide “living wage” movement. Note that this initiative took the form of a national referendum and a popular vote, rather than a decentralized process undertaken by individual cantons.  This tactic no doubt appeals to living wage advocates in the US, who are eager to use misguided populist sentiment and shove preemptive federal wage laws down our throats without the involvement of pesky state legislatures.

Chapter 18 of Hazlitt’s Economics in One Lesson remains the single best summation of arguments against minimum wage laws.  At a mere 1500 words, it’s an easy read for even the laziest of our statist friends.  The chapter is here, while the entire book (itself an easy read) in pdf form is here.

Please join us in fighting the growing “inequality” meme by demolishing the case for minimum wage laws.  Spread these Hazlitt links far and wide!!

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Source: MISES INSTITUTE