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Inequality and Envy

May 30, 2014 in Economics

By Peter G. Klein

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Henry Hazlitt

Inequality seems to be the prime concern of Right Thinking People everywhere. But almost no one is drawing out the connections between inequality and envy. As Henry Hazlitt wrote in 1972, “[t]here can be little doubt that many egalitarians are motivated at least partly by envy, while still others are motivated, not so much by any envy of their own, as by the fear of it in others, and the wish to appease or satisfy it.” Indeed, contemporary discussions of income and wealth distribution, progressive taxation, the “long-run return to capital,” and the like would greatly benefit from careful study of great works like Helmut Schoeck’s Envy and Bertrand de Jouvenel’s Ethics of Redistribution. Murray Rothbard’s “Freedom, Inequality, Primitivism and the Division of Labor” should be required reading as well.

An important point coming out of this literature is that envy is generally strongest when inequalities are small, rather than large. Huge inequalities of wealth, income, or consumption are considered irrelevant; smaller inequalities are seen as remediable through state action. As noted yesterday by Peter Schiff, consumption inequality is probably far lower today, in Western countries, than in most societies in human history. The average Roman didn’t think often about Crassus, but the average American — part of the global 5% — thinks a lot about the wealthier Americans across town.

As Hazlitt noted, de Tocqueville saw modest inequality as the driving force behind the French Revolution. “The most popular theory of the French Revolution is that it came about because the economic condition of the masses was becoming worse and worse, while the king and the aristocracy remained completely blind to it. But de Tocqueville, one of the most penetrating social observers and historians of his or any other time, put forward an exactly opposite explanation.” Hazlitt quotes the French historian Emile Faguet:

Here is the theory invented by Tocqueville. . . . The lighter a yoke, the more it seems insupportable; what exasperates is not the crushing burden but the impediment; what inspires to revolt is not oppression but humiliation. The French of 1789 were incensed against the nobles because they were almost the equals of the nobles; it is the slight difference that can be appreciated, and what can be appreciated that counts. The eighteenth-century middle class was rich, in a position to fill almost any employment, almost …read more

Source: MISES INSTITUTE

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In Series of Historic Votes U.S. House Prohibits DEA from Undermining State Medical Marijuana and Hemp Laws

May 30, 2014 in PERSONAL LIBERTY

By drosenfeld

First Time Ever Congress Approves Major Marijuana Law Reform

Bipartisan Rebuke of U.S. Drug War, DEA Overreach and Mismanagement by DEA Administrator Michele Leonhart

Teleconference Today at Noon ET with Members of Congress, Medical Marijuana Patients and Advocates

In a series of historic votes, the U.S. House voted to prohibit the DEA from undermining state marijuana laws. The House approved a bipartisan measure prohibiting the Drug Enforcement Administration (DEA) from undermining state medical marijuana laws; the amendment passed with 219 yes votes. An amendment prohibiting the DEA from interfering with state hemp production laws passed with 237 yes votes. An amendment prohibiting the DEA from interfering with state hemp research programs passed with 246 yes votes.

May 30, 2014

Drug Policy Alliance

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Source: DRUG POLICY

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Barack Obama's Feckless and Foolish Foreign Policy: Doing Too Much and Doing It Badly

May 30, 2014 in Economics

By Doug Bandow

Doug Bandow

President Barack Obama enjoyed one of the prerogatives of his office when he spoke at West Point. There may be no better setting for a speech on foreign policy. But it wasn’t easy to defend the incoherent mess representing his administration’s dealings with the world.

The problem is not that the president had no successes to defend—he has resisted persistent neoconservative demands for multiple new wars and interventions. But President Obama almost always rushed to the inconsistent middle ground, entangling the U.S. unnecessarily without committing enough to achieve even his limited ends. Experience demonstrates that Uncle Sam rarely succeeds at being a little bit pregnant. When it comes to military action, chastity more often is the best strategy.

Despite sharp criticism of his speech on the right, Barak Obama got a lot right. For instance, the constant complaint by uber-hawks that the world is dangerous misses the fact that the world is not that dangerous for the U.S. During the Cold War American school children were trained to get under their desks in response to a Soviet missile launch. Military strategists debated how to stop Soviet armored divisions from pouring through Germany’s Fulda Gap. The two superpowers tested and prodded one another in bloody proxy wars in Afghanistan, Angola, Korea, Nicaragua, Vietnam, and elsewhere. Washington and Moscow risked nuclear war over Cuba.

That world is gone. The U.S. dominates the globe. Noted the president: “by most measures, America has rarely been stronger relative to the rest of the world. Those who argue otherwise—who suggest that America is in decline, or has seen its global leadership slip away—are either misreading history or engaged in partisan politics. Think about it. Our military has no peer. The odds of a direct threat against us by any nation are low, and do not come close to the dangers we faced during the Cold War.”

Foreign policy is a difficult business.”

Yet Barack Obama failed to confront the obvious implication of this fact: why does America spend so much on “defense” when it has so little to defend against? In fact, the Department of Defense has little to do with protecting America and far more to do with imposing Washington’s wishes, aspirations, and even whims on the rest of the world. To the extent “defense” is involved, it is primarily defense of others, most obviously prosperous and populous allies in Asia and Europe, which have …read more

Source: OP-EDS

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The EPA’s Political Futility

May 30, 2014 in Economics

By Patrick J. Michaels

Patrick J. Michaels

On June 2, the Environmental Protection Agency is going to announce new rules for existing coal-fired power plants, most likely a 20 percent reduction in allowable carbon dioxide emissions. The only way this will be possible will be by upgrading almost all combustion units, and the ultimate cost of the upgrades will make coal noncompetitive with much-less-expensive natural gas–fired facilities.

The EPA’s proposed new greenhouse-gas regulations are a campaign promise come true. In 2008, Senator Barack Obama announced that, if elected, his climate policies would “necessarily bankrupt” anyone who wanted to build a new coal-fired power plant.

Public comments on EPA’s proposal to do just that closed on May 9, and there is no chance that the president will renege — or that this policy will have any detectable effect on global temperature.

The EPA’s own model, ironically acronymed MAGICC, estimates that its new policies will prevent a grand total of 0.018ºC in warming by 2100. Obviously, that’s not enough to satisfy the steadily shrinking percentage of Americans who think global warming is a serious problem.

MAGICC tells us that the futility of whatever Obama proposes for existing plants will be statistically indistinguishable from making sure that there are no new coal-fired ones. In fact, dropping the carbon dioxide emissions from all sources of electrical generation to zero would reduce warming by a grand total of 0.04ºC by 2100.

This is hardly going to stop the crescendo of global-warming horror stories, perhaps best summarized by the government’s recently released “National Assessment” of the effects of climate change on our country. 

For example, the assessment tells us that global warming will increase mental illness in our nation’s cities. The obvious implication is that people in Richmond are crazier than they are in Washington, 100 miles to the north. Or that people must really be loony in Miami.

But what about all the weird weather plaguing the country? What the alarmists don’t tell you is that not since records were kept in the 1860s have we have gone this long without a Category 3 hurricane’s crossing our shoreline. They omit that there’s no evidence of an increase in weather-related damages once you adjust for the fact that there are now more people with more expensive stuff to hit. Even the United Nations Intergovernmental Panel on Climate Change, so often cited to justify our futile policies, acknowledges that one.

The politics of scaring people to death over climate change are probably more …read more

Source: OP-EDS

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Obama Wants Allies to Share the Burden. It Won't Happen.

May 30, 2014 in Economics

By Christopher A. Preble

Christopher A. Preble

In his West Point speech this week, President Obama vowed to encourage America’s allies to shoulder more of the burden in dealing with international problems and providing for their own defense. Unfortunately, this is far-fetched unless Obama acts to reduce America’s global military commitments.

Obama’s speech will not satisfy the harshest critics of his foreign policy, but, in fairness, no speech was likely to do that. If the critics were expecting him to, for example, recant his opposition to sending U.S. troops into the middle of brutal civil wars, they were sure to be disappointed.

But a dramatic change in U.S. foreign policy dedicated to the use of force to advance U.S. interests was unlikely because there are real constraints on the United States’ ability to use force. And Barack Obama must fashion a policy within those constraints.

The speech revealed the limits of U.S. military power. Indeed, in a line sure to enrage Iraq war proponents, Obama explained, “some of our most costly mistakes came not from our restraint, but from our willingness to rush into military adventures—without thinking through the consequences…or leveling with the American people about the sacrifice required.”

While the speech won’t appeal to those anxious for the U.S. military to become engaged in a range of new conflicts, however, it may be equally disappointing to a public hungry for a different foreign policy that keeps us out of reckless wars.

America’s friends won’t take more responsibility for their own defense if we don’t make them.”

Even if President Obama were inclined to send the U.S. military on more missions around the world, he knows that the American people are not so inclined. He learned that the hard way after he drew an ill-advised red line before Syria’s Bashar Assad, and then was forced into a humiliating retreat when the public rose up in opposition.

The president intends to avoid a repeat of that particular debacle, as he made clear in his speech, by calling on other countries to step forward. He pledged to “coordinate with our friends and allies in Europe and the Arab world…and make sure that those countries, and not just the United States, are contributing their fair share of support to the Syrian people.”

In a similar vein, he alluded to a shift in counter-terrorism strategy that will “partner with countries where terrorist networks seek a foothold,” rather than one that involves …read more

Source: OP-EDS

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Mises Weekends: A New Series of Interviews Hosted by Jeff Deist

May 29, 2014 in Economics

By Ryan McMaken

MisesWeekends_v2_Deist_1400

Beginning tomorrow night, Mises Weekends will bring you a new show every week featuring timely interviews and discussions on current trends and events with journalists, scholars, entrepreneurs, and more.

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Source: MISES INSTITUTE

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More on Grad School

May 29, 2014 in Economics

By Peter G. Klein

master-and-apprentice

I appreciate Walter’s useful advice on surviving graduate school as an Austrian economist or libertarian or both. (I’ve also discussed graduate school strategies, and more general career issues, at Mises University; here is a talk from 2010.) I do have one disagreement, however. Walter writes: “Don’t take any part time jobs; don’t be anyone’s research assistant. Don’t be a teaching assistant. Don’t teach any courses. Just study to pass your courses with the best marks possible, and pass your oral or comprehensive exams.”

There are two problems with this. First, it is difficult to get a tenure-track position at a college or university without any teaching experience. I agree with Walter that grad students should not do a lot of teaching, either as primary instructors or teaching assistants, because this interferes with the dissertation. But having some teaching experience, and good student evaluations, can help on the job market.

Second, working as a professor’s research assistant usually leads to a better dissertation. Academic research is difficult and, like other skilled crafts, is often best learned through an apprenticeship model. You cannot learn how to be a good researcher just by listening to lectures and reading articles and books. You learn from experience. By working with a professor — hopefully on an article — you see how the sausage is made. You learn to formulate research questions, to evaluate existing literature, to collect and analyze data if appropriate, to write up results, and to deal with journal editors and reviewers. Moreover, students who don’t already have a dissertation topic can often find one as a spin-off of a professor’s existing project. Of course, grunt work — e.g., entering data into a spreadsheet — should be avoided if possible. But assisting a more experienced researcher is usually the best way to learn the craft.

…read more

Source: MISES INSTITUTE

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Janet, Joe, Lou, and the Babe

May 29, 2014 in Economics

By Joseph Salerno

Our money-printer-in-chief, Janet Yellen, gave the commencement address at NYU’s graduation ceremony in Yankee Stadium.  She advised the 8,000 assembled graduates that it is  ”an unfortunate myth” that “something called ‘ability’” has much to do with success.  (Ability being an innate characteristic, it would of course have been politically incorrect for her to have said otherwise.)  Rather Yellen touted “grit,” perseverance, and passion for one’s work as the most important job skills.

Highlighting the importance of perseverance, Yellen stated:

Yankee Stadium is a natural venue for another lesson: You can’t succeed all the time.  Even Ruth, Gehrig, and DiMaggio failed most of the time when they stepped to the plate.  Finding the right path in life, more often than not, involves some missteps.  My Federal Reserve colleagues and I experienced this as we struggled to address a financial crisis that threatened the global economy.

Now it is true that Ruth, Gehrig and DiMaggio were only successful in about one-third of their career at bats.  But in its 100-year history the Fed has never succeeded in attaining its stated goal of providing sound money to the U.S. economy and abolishing business cycles.  Its missteps have been legion and legendary, and committed in every decade of its existence.  It orchestrated massive price inflation during and immediately after World War 1 and the Great Inflation of the 1970s (which began in the mid-1960s).  During World War 2, the massive expansion of the money supply that it engineered in conjunction with draconian price controls caused the phenomenon of “repressed inflation” that featured a shortage of goods and coercive government rationing, not to mention the explosion of  prices immediately after the war.  The asset bubbles that it created in the 1920s, 1980s, 1990s and  2000s all culminated in financial crises and recessions/depressions of greater or lesser length and intensity.  Its attempt to “reflate” the economy and prevent prices and wages from adjusting to market conditions after the Great Crash of 1929 was one of the factors that caused an agonizing prolongation of the Great Depression.    Currently, we are confronted with signs of  incipient bubbles in stocks and real estate as a result of the Bernanke/Yellen regime of quantitative easing and zero interest rate targeting.

Yes, Yellen and her predecessors have shown remarkable perseverance.  But they have all persevered in a fool’s errand, which no one has the “ability” to accomplish: trying to centrally plan the supply and …read more

Source: MISES INSTITUTE

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Advice for Grad Students

May 29, 2014 in Economics

By Walter Block

1280px-Bibliotecaestantes

At Loyola University, my colleagues and I have been very successful in sending off numerous of our graduating economics majors to graduate school, to get a phd in economics. Here is some advice I offer them, which might be helpful to others as well:

Advice for grad students (some of this advice is personal to me; take what makes sense to you and ignore the rest):

1.Your goal is to get that phd, asap. Don’t let anything interfere with that, if at all possible. If you need money, take out loans, don’t work and let that interfere with your studies.

2.Don’t take any part time jobs; don’t be anyone’s research assistant. Don’t be a teaching assistant. Don’t teach any courses. Just study to pass your courses with the best marks possible, and pass your oral or comprehensive exams.

3.Don’t argue with your professors, certainly not on basic issues. Your job is not to convert them to laissez faire capitalism, to Austrianism, to libertarianism or anything else. It is only to get that phd, asap.

4.Pick a relatively non controversial dissertation topic. Pick a professor to guide you who has prestige within the department (if your committee rejects your dissertation, it is a slap at your advisor too; so pick one who will not likely get slapped).

5.I found the most difficult part of getting my phd was writing the dissertation (although the oral exam was tough). I was accustomed to classes, but never to a long protracted period of research and writing. Grit your teeth and write that material! After a while, I found working on that dissertation to be boring (it was mostly gathering of statistics, and running econometric studies). So, to perk myself up, I gave myself a reward system. If I did thus and such on my dissertation, I would reward myself with a day or two when I could do anything I wanted. On these days off, I would write things in defense of the pimp, or blackmail, or counterfeiting counterfeit money. By the time I finished my phd I had about 30 of these essays, which I later published as Defending I.

6.Make sure you “pack” your dissertation committee to the best of your ability. At Columbia, where I got my phd, Gary Becker was my dissertation advisor, my topic was rent control, certainly not controversial within the econ dept; when Gary left for Chicago, Bill Landes took over this role. …read more

Source: MISES INSTITUTE

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How Political High Jinks Prevent Private Savings and Investment

May 29, 2014 in Economics

By Ryan McMaken

400px-Tour_eiffel_at_sunrise_from_the_trocadero

[Note: Antoine Clarke at the Cobden Centre explains how political instability in France destroyed the incentive to save, and how the French and Russian states conspired to steal even more.]

“The Death of French Savings, the Russian Bonds Story 1880-1996″

By Antoine Clarke

The following text is from the notes I made of a talk that I gave to the “End of The World Club” at the Institute of Economic Affairs on 18 April 2014.

If there is one feature of human society that makes it successful, it is the capacity that human beings have of choosing to satisfy short-term appetites or to defer gratification. This ability to distinguish between short term and long term interests is at the heart of economics.

But why defer consumption? Why save at all?

One reason is the transmission of wealth from one generation to the next. Another is to ensure security in hard times.

A complaint of American academics about French savings in the 19th century is that they were too conservative. Easy for them to say.

The population of France grew more slowly than any other industrialising nation in the 19th century (0.2% per year from 1870 to 1913, compared with 1.1% for Germany and 0.9% for Great Britain). The figures would be even worse if emigration from the British Isles were added to the headcount.

This slower rate of population growth would tend to mean a slower rate of economic growth: smaller local markets, fewer opportunities for mass production. This was well known to be a problem in France. In fact Jean-Baptiste Say was sent to England in 1815 to study the growth of English cities such as Birmingham and its effect on the economy (here in French).

The causes of low investment must surely include political and social instability.

Here are the changes of regime in France during the 19th century:
1800-1804: The Consulate
1804-1814: The Empire
1814: The First Restoration
1814-1815: The Return of Napoleon
1815-1830: The Return of the Restoration
1830-1848: The British Experiment
1848-1851: The Second Republic
1851-1852: The military coup-d’état
1852-1859: The Empire Strikes Back
1860-1870: The Free Trade Experiment (supported by Richard Cobden)
1870-1871: Three sieges of Paris, two civil wars, one foreign occupation
1870-1879: The State Which Dare Not Speak Its Name (retrospectively declared to be a republic)
1879-1914: La Belle Epoque (including the anarchist bombings 1892-1894 and the Dreyfus Affair 1894-1906)

If instability discourages savings, it is remarkable how much there actually …read more

Source: MISES INSTITUTE