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Political Spam

June 30, 2014 in Economics

By Randall Holcombe

I don’t know if you are as popular with the political insiders as I am, but already today I have received emails from Joe Biden, Nancy Pelosi, and Debbie Wasserman Schultz. In fact, I’ve received more than a dozen emails today alone from either the Democratic Party, Democrats involved in election campaigns, or Democratic interest groups.

The Democrats aren’t the only ones who email me. I’ve also received emails today from Republicans and Libertarians, though not as many.

I am somewhat interested in getting the emails just because I’m curious about what they are saying (besides “Send Me Money’), but the Democrats are trying my patience with their huge volume of daily spam. I think it’s amusing, for example, to get an email that says I should donate because “We have to defeat the Koch brothers.” I didn’t know the Koch brothers were running for anything.

But really, how effective can these emails be when more than a dozen arrive every day. Today’s volume of political spam is not unusual for me; it’s just the day I decided to blog about it.

I have no idea where any of these parties got my email address. I assure you I did not provide it to them. Also, I have never donated any money to any political party. I have, on occasion, given money to individual candidates, but I do have a rule about candidate contributions that I’ve never violated: I only give money to candidates who I actually know in person. I’ve never given money to any candidate I’ve never met, or to any political party.

So, it’s not like they’ve found a sucker who will respond to these emails by giving them money. I’ve never done that. But I keep getting this political spam anyway. Of course, once they have your email address, it costs them nothing to send me an email along with the rest of their email list.

…read more

Source: MISES INSTITUTE

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Sen. Paul’s Statement on SCOTUS Right to Work Decision

June 30, 2014 in Politics & Elections

WASHINGTON, D.C. – Sen. Rand Paul today issued the following statement after the Supreme Court ruled to reject mandatory union dues for home-health aides:
‘I applaud the blow struck for worker freedom decided today by the U.S. Supreme Court. These home-healthcare workers should not, and will not, have to pay union dues as a condition of employment. Further, the court’s hinting at overturning Abood and invalidating forced union clauses nationwide is heartening,’ Sen. Paul said. ‘No worker anywhere should be forced to pay dues to a union in order to work. That’s why I am the sponsor of a National Right to Work law, and why I will continue to encourage others to challenge forced union dues in their entirety before the court in the near future.’
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Source: RAND PAUL

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First Gulf War in 1991 Was America's Opening Iraq Mistake

June 30, 2014 in Economics

By Gene Healy

Gene Healy

Now’s not the time to re-litigate the Iraq War, we’re told — mostly by people whose bright idea it was in the first place.

If we “spend our time debating what happened 11 or 12 years ago,” says former vice-president Dick Cheney, we’re “missing the boat.”

Contra Cheney, it’s important to examine our past mistakes, lest we get snookered into repeating them. Going back 11 or 12 years isn’t enough — it’s past time to reevaluate the Gulf War of 1991, the “famous victory” that helped get us into this mess.

“History will say we got this one right,” former president George H.W. Bush declared in 2011. True enough, as the conventional wisdom evaluates our two Gulf Wars very differently: a “war of necessity” vs. a foolish “war of choice,” a “good war,” and its pointless and bloody sequel 12 years later.

But both wars were wars of choice — and bad choices at that.

After Saddam Hussein seized Kuwait in August 1990, it was natural to wonder whether restoring the Kuwaiti prince and protecting the Saudi monarchy was worth American blood and treasure.

But we were after much loftier goals, the first Bush administration insisted. Repulsing Saddam could, Bush 41 told Congress on Sept. 11, 1990, usher in a “New World Order” — “a new era, freer from the threat of terror, … more secure in the quest for peace.”

Then-Secretary of State James Baker offered a homelier rationale, all-but embracing the left-wing charge that the administration was bent on waging war for oil.

“We cannot permit a dictator … to sit astride [the Gulf’s] economic lifeline,” Baker contended, “if you want to sum it up in one word, it’s ‘jobs.’”

But, as David Henderson, former senior energy economist with Reagan’s Council of Economic Advisers, explained in the run-up to the war, the “vaunted ‘oil weapon’ is a dud.”

Avoiding war would, Henderson calculated, cost the U.S. economy “at most one-half of one percent of GNP” — or an extra 24 cents per gallon at the pump.

Henderson’s figures looked at the absolute worst-case scenario, which included an Iraqi conquest of Saudi Arabia.

At the time, the Pentagon claimed satellite photographs showed a quarter of a million Iraqi troops poised to roll across the Saudi border.

Reporter Jean Heller of the St. Petersburg Times decided to check. She purchased commercial satellite photos of the border region, which showed empty desert.

When she contacted the office of then-Secretary of Defense Dick Cheney for evidence to the contrary, “trust us,” was the best the Pentagon …read more

Source: OP-EDS

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An Act of Economic Strangulation

June 30, 2014 in Economics

By Richard W. Rahn

Richard W. Rahn

Do you know why the U.S. economy shrank almost 3 percent in the first quarter of this year? When the news of the dreadful gross domestic product (GDP) number came out last week, many were surprised, but none were more surprised than the folks in the Obama administration. Many of their supporters had been saying this was the year of a real economic recovery.

The quick reaction was to blame the bad GDP numbers on the weather, and it is true that much of the country did have record cold temperatures, but in all likelihood the weather was only a minor factor. (It is rather ironic that the president blames the bad economy on the cold weather, while at the same time he is running around the country saying we have to spend many more tax dollars to prevent warmer weather a hundred years from now. Misplaced priorities?) The excuse-making by the president reminded me of how the rulers of the Soviet Union used to blame bad economic news on the weather — 70 years of bad weather.

However, serious economists such as professor Casey Mulligan of the University of Chicago have better explanations for the downturn. Mr. Mulligan has carefully documented both the explicit and implicit new taxes in Obamacare, many of which came into effect during the first quarter of this year. An implicit tax is a reduction in benefits going to workers, which reduces the rewards for working. Mr. Mulligan argues that Obamacare adds “about six points to the marginal tax rate faced, on average, by workers in the economy . Let’s not be surprised that, as we implement a new law that taxes jobs and incomes, we are ending up with fewer jobs and less income.”

Economic forecasters are downgrading their outlook for the U.S. economy this year. Yet the administration blames others for these mostly self-created economic headwinds. The United States has the highest corporate tax rate in the world among developed countries. Officers of companies that can produce and sell goods and services in many countries fail in their fiduciary responsibilities if they choose to headquarter them here, other things being equal, when they could save two-thirds or more on their corporate tax bill by moving out of the United States. As a result, almost every week there are announcements of companies moving out of the U.S., which over time will mean fewer jobs, reduced research and development and less total tax revenue. The obvious solution is to reduce the …read more

Source: OP-EDS

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Tyler Cowen’s “Comical Memo”

June 30, 2014 in Economics

By Joseph Salerno

Forbes’ columnist John Tamny executes an inspired and wonderfully savage critique of GMU economist Tyler Cowen’s dotty blog post touting the positive effects of war on economic growth.  Tamny takes his cue from Henry Hazlitt and writes in plain and muscular language.  Here is a juicy sampler that should whet your appetite for the full meal:

[T]o clarify Cowen’s views to readers, he writes that “the very possibility of war focuses the attention of governments on getting some basic decisions right – whether investing in science or simply liberalizing the economy.” His first example is laughable, and his second easily disprovable.

Government spending on science presumes that politicians can better allocate capital than can private actors operating under market discipline. To believe what Cowen is offering up, the lack of a war threat today is depriving Harry Reid, Mitch McConnell, Nancy Pelosi and John Boehner of the opportunity to expertly invest the money of others in the killing machines of the future; the knowledge gained from those investments eventually migrating to commercial ideas that would boost growth. You can’t make this up. Cowen is serious.

As for the notion that countries somehow need the threat of war to achieve great scientific advances, or better yet, liberalize their economies, apparently Switzerland, Hong Kong, and New Zealand (among many others) didn’t get Cowen’s comical memo. With all three, no credible voice in modern times has argued that either faced war or imminent attack that would have “focused” the attention of their politicians on the way to economy-boosting liberalization, or, if Cowen is to be believed, political advancement of “technological invention” and greater “internal social order” supposedly needed for major expansion.

Indeed, what all three remind us, and it’s something seemingly lost on Cowen, is that economic growth is really very simple. We all have myriad wants and needs, our production is our demand, so when governments remove the barriers to production, the individuals who comprise any economy tend to thrive. Thinking about the U.S. economy with the latter in mind, our economy is presently limp not because we lack some national, war-mongering purpose (apparently Cowen forgot all the national initiatives of the 20th century that robbed the world of well over 100 million people), but precisely because our political class has violated the four basics (taxes, regulation, trade, and money) to economic growth.

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Source: MISES INSTITUTE

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Sen. Paul Praises SCOTUS Hobby Lobby Decision

June 30, 2014 in Politics & Elections

WASHINGTON, D.C. – Sen. Rand Paul today issued the following statement after the U.S. Supreme Court’s ruling sided with Hobby Lobby on the contraception mandate:

‘Today, the Supreme Court ruled in favor of religious freedom by taking a stand with Hobby Lobby. Religious liberty will remain intact and all Americans can stay true to their faith without fear of big government intervention or punishment,’ Sen. Paul said. ‘Our nation was founded on the principle of freedom, and with this decision, America will continue to serve as a safe haven for those looking to exercise religious liberty.’

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Source: RAND PAUL

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“Something amiss…so it would seem”

June 30, 2014 in Economics

By Mark Thornton

The National Association of Credit Management issued its Credit Managers Index, calling it “less than impressive.” “It now appears that the economy contracted by far more than originally reported,” NACM economist Chris Kuehl said. “Add to this the latest data on durable goods and there is something amiss. Consumer confidence numbers have recovered to levels not seen since the start of the recession, but that renewed level of enthusiasm has not been enough to pull the economy forward, or so it would seem.” Most importantly the number of applications for credit increased, but so did the rejection rate. According to Kuehl. “When there are more applicants and more rejections, it is a signal that more companies in financial distress are seeking credit in the hopes that somebody will help them survive.”

Columbia, MD: June 30, 2014—This month’s Credit Managers’ Index (CMI) reading from the National Association of Credit Management (NACM) was 56.1—barely higher than it was in April, but falling well below May’s 56.8. The readings had been closing in on 60 (57.1 in November and 57.3 in January) and are still firmly in positive territory, but are now just not trending in the preferred direction. The services sector took the brunt of the impact, and the manufacturing sector did not budge, for the second month in a row.

After the readings last month, it was thought that the CMI would show continued progress, but the manufacturing sector was flat and the service sector experienced a very sharp decline—enough to drag the index down. “The drop was unexpected, which has suddenly become a common refrain as some other data releases are starting to show similar trends,” said NACM Economist Chris Kuehl, PhD. The economy is clearly not out of the woods just yet, and the latest revision of first quarter GDP came as a shock. “It now appears that the economy contracted by far more than originally reported,” Kuehl said. “Add to this the latest data on durable goods and there is something amiss. Consumer confidence numbers have recovered to levels not seen since the start of the recession, but that renewed level of enthusiasm has not been enough to pull the economy forward, or so it would seem.”

The damage was greater in the unfavorable categories although the favorable factors saw some decline as well. The combined index of favorable factors deteriorated slightly from 62.7 to 62.4, but that is still …read more

Source: MISES INSTITUTE

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Libertarianism and Federalism

June 30, 2014 in Economics

Does federalism promote liberty? Or does having multiple levels of government rather than one merely create additional layers of oppression? These are vital questions for libertarians. In a new paper, law professor and Cato scholar Ilya Somin systematically evaluates federalism from a libertarian standpoint and finds that “Federalism is often a valuable tool for protecting freedom, but can also be a menace.”

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Source: CATO HEADLINES

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Bubbles Worry Central Bankers

June 30, 2014 in Economics

By David Howden

After years of QE and other loose monetary policies, central banks are starting to get jitters about the effects of their policies.

An organization representing the world’s main central banks warned Sunday that dangerous new asset bubbles were forming even before the global economy had finished recovering from the last round of financial excess.

Investors, desperate to earn returns even as official interest rates are at or near record lows, have been driving up the prices of stocks and other assets with little regard for risk, the Bank for International Settlements in Basel, Switzerland, said in its annual report published Sunday.

It turns out that low interest rates do have a cost. And that cost is not just limited to increased risk taking. According to Jaime Caruana, the general manager of the BIS, “during the boom, resources were misallocated on a huge scale… [I]t will take time to move them to new and more productive uses.”

The time it takes to move these resources to where they are valued most highly is being disrupted by central bank monetary policy. Consider the size of the financial sector, or the amount of leverage in the economy. Few would say that there either of these factors were not something that contributed to the crisis in 2008. By foisting low interest rates onto their economies, central banks have slowed or stopped altogether the deleveraging and shrinking of the financial sectors, none of the adjustments necessary for recovery.

Part of the problem is that central bankers don’t understand what interest rates are.

The B.I.S. also had harsh words for corporations, which it said were not taking advantage of booming stock markets to step up investment. That is one reason that gains in productivity — the foundation of sustained economic growth — have slowed in most advanced economies, according to the report. “Despite the euphoria in financial markets, investment remains weak,” it said. “Instead of adding to productive capacity, large firms prefer to buy back shares or engage in mergers and acquisitions.”

These central bankers are stuck in a mindset of “hydraulic Keynesianism” where prices are supposed to be manipulable to get the desired result. Never mind that corporations are currently trying to reduce risk exposure, and that low interest rates are hindering, not helping them do this.

(Originally posted at Mises Canada.)

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Source: MISES INSTITUTE

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The Perfect Debate?

June 29, 2014 in Economics

By Mark Thornton

Just prior to my debate at Oxford Union I asked the organizers; had there ever been an unanimous vote on any debate? They replied; oh no, that would be a very bad result because it meant that they had formulated a very poor proposition to be debated and/or that they had formed very unbalanced debating teams for and against the proposition. In my case I suppose you could declare it a perfect debate because it ended in a tie.

The Oxford Student reported this about the debate (paraphrased):

The case for the proposition was based on a political double standard as to how far the state could go with prohibition. The war on drugs created and gave power to drug dealers which causes crime and violence. The war on drugs is doomed to fail because the more it is advanced, the more money and power it provides organized crime.

The case for the opposition was based largely on the idea that drugs are dangerous and are otherwise useless. The “war” has really never been tried and has been too liberal, not too punitive. They argued that we must use “tough love” and that legalization would lead to an immense population of hardened drug addicts, crime, and death.

The verdict:

The debate ended in a draw and Union President Ben Sullivan had a casting vote, which meant that the opposition won.

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Source: MISES INSTITUTE