You are browsing the archive for 2014 June 09.

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Sen. Paul Continues to Object to Federal Reserve Nominations

June 9, 2014 in Politics & Elections

WASHINGTON, D.C. – Sen. Rand Paul today declared his intent to object to the pending nominations to the Federal Reserve System unless S. 209, the Federal Reserve Transparency Act, is also considered. Sen. Paul has requested consideration of the Federal Reserve Transparency Act for four consecutive years and will continue to oppose all Federal Reserve nominations until this legislation is considered. ‘The American people have a right to know what this institution is doing with the nation’s money supply. The Federal Reserve does not need prolonged secrecy-it needs to be audited, and my bipartisan Federal Reserve Transparency Act will do just that,’ Sen. Paul said. …read more

Source: RAND PAUL

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Splitting the Pizza

June 9, 2014 in Economics

By Peter G. Klein

pizza

Apple underwent a 7-1 stock split last night, such that shares that traded at $645 yesterday opened this morning at $92. Much of the media coverage took a playful tone, e.g., “Don’t freak out. Here’s why Apple’s stock is below $100.” I was particularly intrigued by the brief story on today’s NPR Morning Edition. As the host explained, it’s not that Apple is worth less, just that Apple’s total market capitalization is being divided into a larger number of shares. “It’s like a pizza. If you cut it into 8 slices instead of 6, you don’t get a larger pizza, just smaller slices.”

How ironic, coming from a news outlet that embraces fully the naive, sophomoric, “vulgar Keynesianism” that dominates today’s economic policy discussions. NPR’s researchers, writers, hosts, and guests are 100% convinced that dividing the economy’s stock of real wealth by a larger number of paper tickets gives us, well, more real wealth!

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Source: MISES INSTITUTE

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Rothbard Graduate Seminar

June 9, 2014 in Economics

By Peter G. Klein

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The Rothbard Graduate Seminar, our signature event for advanced students in economics and related disciplines, began this morning with a terrific session on economic methodology. The week-long event combines plenary lectures on core Austrian concepts with student-led roundtable discussions that bring out the nuances, applications, challenges, and new directions. The text is selected chapters from Murray Rothbard’s collection Economic Controversies, along with supplemental readings from Rothbard’s Strictly Confidential. The full schedule is here. Graduate students and other scholars doing work in the Austrian tradition, plan to apply for next year’s version!

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Source: MISES INSTITUTE

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The DEA: Four Decades of Impeding And Rejecting Science

June 9, 2014 in PERSONAL LIBERTY

By drosenfeld

June 9, 2014

Drug Policy Alliance, MAPS

DPA Publication

This report, co-published by DPA and MAPS, illustrates a decades-long pattern of behavior that demonstrates the Drug Enforcement Administration’s (DEA’s) inability to exercise its responsibilities in a fair and impartial manner or to act in accord with the scientific evidence. The report’s case studies reveal a number of DEA practices that maintain the existing, scientifically unsupported drug scheduling system and obstruct research that might alter current drug schedules.

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Source: DRUG POLICY

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Will Supreme Court Protect Workers' Rights against Union-Government Collusion?

June 9, 2014 in Economics

By Ilya Shapiro

Ilya Shapiro

Those who support the power of unions and governments over the rights of workers are scared of the Supreme Court’s imminent ruling in Harris v. Quinn, in which a group of home health aides challenge an Illinois law that compels them to join a union and pay dues.

For example, Prof. John Logan in The Hill’s Contributors blog on May 29 began his analysis of Harris by attacking the workers’ lawyers as “extremist” and warned that “a sweeping ruling against agency fee agreements in the public sector in Harris v. Quinn would be an extreme and blatantly political act.”

If affirmed, the lower court’s decision would enable politicians and labor leaders to conspire in circumventing the First Amendment’s limitations on compelled speech and association to bolster the ranks and finances of organized labor.”

What’s going on here? Are these personal-care assistants, most of whom tend to their own disabled family members, possessed of a false consciousness, selling out their comrades on behalf of some corporate exploiter?

Not quite. All they want is to be free from having to subsidize the speech and activities of the Service Employees International Union. Indeed, there’s no business or corporate interest here at all: The workers who brought the lawsuit are independent contractors whose “boss” is the person they’re caring for. But don’t take my word for it; under Illinois law, the disability program participant, or “customer,” is “the employer of the PA [personal assistant]” and “is responsible for controlling all aspects of the employment relationship between the customer and the PA, including, without limitation, locating and hiring the PA, training the PA, directing, evaluating and otherwise supervising the work performed by the PA, imposing … disciplinary action against the PA, and terminating the employment relationship between the customer and the PA.”

Nonetheless, while expressly preserving customers’ rights to hire and fire their aides, the Illinois legislature in 2003 labeled PAs as “public employees …. [s]olely for the purposes of coverage under the Illinois Public Labor Relations Act,” which provides for collective bargaining. The state then designated SEIU as their exclusive representative and entered into a collective-bargaining agreement requiring all aides to remit union fees.

The Supreme Court did uphold, in the 1977 case of Abood v. Detroit Board of Education, the constitutionality of compulsory dues to finance a public-sector union, finding that the government interest in “labor peace”—preventing massive unrest caused by workers’ differing views—justified the infringement of dissenters’ associational and expressive …read more

Source: OP-EDS

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What Henry Hazlitt Can Teach Us About Inflation in 2014

June 9, 2014 in Economics

By Mises Updates

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Mises Daily Monday by James Grant:

In 1946, as now, the government held up the threat of deflation to justify a policy of ultra-low interest rates. Hazlitt, a student of Mises, exposed the folly of this position in the pages ofNewsweek and elsewhere for more than twenty years. Little has changed since Hazlitt’s day.

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Source: MISES INSTITUTE

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So Many Bad Decisions, So Little Time

June 9, 2014 in Economics

By Richard W. Rahn

Richard W. Rahn

Would you have traded five terrorists for Sgt. Bowe Bergdahl? The decision may have been wrong or right, but what is striking is that President Obama seems to have made this decision, and all too many others, in an ad hoc way, rather than using decision theory.

Decision theory is an orderly way of thinking and choosing among alternatives when there is a number of variables for which the probabilities of each may or may not be known to the decision-maker. A related concept is that of “regret,” which is the difference between the actual payoff and the best one. In the Bergdahl case, as the president has acknowledged, there is a risk that some of the released terrorists may go back to their old ways and kill Americans. The president put a low probability on that outcome. Yet some CIA officers put a high probability on that outcome. How much “regret” evaluation did the president and the CIA do in coming up with their conflicting judgments?

Both individuals and government leaders make many bad decisions because they let emotion or ideology override reason and empirical evidence.”

Politicians and criminals both have a tendency to underestimate the probability of getting caught in bad acts. Is it because few studied decision theory or because there is a certain recklessness in the nature of those who follow such pursuits? We know from empirical evidence that very visible politicians have a high chance of getting caught with their pants down (so to speak) — think of Bill Clinton, John Edwards and Eliot Spitzer. President Clinton managed to get himself impeached, indirectly, over an act of momentary pleasure — and, even though a smart guy, he underestimated the probability of being caught.

Almost everything we do has costs and benefits. Getting a college education has costs before the benefits, while drinking too much at a party often appears to have benefits, but the costs come due the next morning. There is a natural human tendency to overestimate the benefits of various anticipated actions and to underestimate the costs. This applies to government regulators. The president tells us how concerned he is about global warming, yet the measures that his own administration has implemented and is trying to impose will cost hundreds of billions of dollars, if not trillions, and by its own estimates, will only reduce temperatures by two-tenths of one degree in 100 …read more

Source: OP-EDS

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Education Excellence Can't Be Achieved from Above

June 9, 2014 in Economics

By Jason Bedrick

Jason Bedrick

Education in America in the 21st century is moving away from the standardization of the Industrial Era and toward greater customization. As parents increasingly tailor their children’s education through course choice, scholarship tax credits, education savings accounts, homeschooling, online and blending learning, and so on, top-down accountability schemes will become increasingly untenable. As our education system becomes more decentralized and complex, the locus of accountability should shift from government to parents.

The best form of accountability is directly to parents who are empowered to choose the education providers that meet their children’s needs—and leave those that do not. Since low-income families often cannot afford anything besides their assigned district school, the government school system has had to impose top-down accountability measures to ensure quality in the absence of choice.

As our education system becomes more decentralized and complex, the locus of accountability should shift from government to parents.”

However, such centralized accountability measures are ill suited to handle complexity and tend to stifle diversity and innovation. As University of Arkansas Professor Jay P. Greene noted recently:

“With top-down reforms the people selecting the standards, designing the tests, setting the cut-scores, devising consequences for performance, writing the curriculum, and picking the instructional methods have to get it just right … for many different kinds of kids who may need different approaches. And they have to be right over and over again as circumstances and information change.”

That’s a nearly impossible task even before special interests attempt to block, dilute, or co-opt such measures. Moreover, a parent seeking to change the system is, at best, merely one out of tens of thousands of voters at the local level or one out of tens of millions at the state level. With the advent of Common Core’s national standards, a parent’s ability to affect systemic change is practically nil.

By contrast, educational choice programs foster innovation and diversity by putting parents in charge. They give space to providers to develop new ways of educating diverse children that might not fit the pre-existing mold. Parents can then evaluate which approaches work best for their children and which do not. Over time, this market process weeds out ineffective approaches and encourages the proliferation of more effective approaches.

Some advocate combining the two forms of accountability, attempting to harness the dynamism of market-based education reforms while tethering it to a single standardized test that allows for apples-to-apples comparisons. This may sound …read more

Source: OP-EDS

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IMF Gets It Wrong

June 9, 2014 in Economics

By David Howden

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Christine Lagarde admits that the International Monetary Fund “got it wrong” when it chastised the British government’s austerity plans. One year ago the IMF’s chief economist Oliver Blanchard claimed the U.K. was “playing with fire” by cutting its budget.

With the benefit of hindsight, the IMF has changed its stance. The U.K. economy is set to grow 2.9% this year, the fastest among the G7 nations. Furthermore, the growth is being driven by investment spending, not consumption as the IMF had long thought necessary.

Though she stopped short of apologizing for the Fund’s poor recommendations in the past, Lagarde allude to begging for forgiveness. Rather than seeking forgiveness after the IMF makes a mistake, why doesn’t it stop giving out bad advice so that it doesn’t find itself in these embarrassing situations in the future.

(Originally posted at Mises Canada.)

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Source: MISES INSTITUTE