You are browsing the archive for 2014 June 29.

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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

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The Market on Piketty

June 29, 2014 in Economics

By Per Bylund

With all the fuss about the French economist’s tome on capital and perpetually growing inequality, one perspective that is uncommon in the commentary is what “the market” thinks of Piketty’s characterization of it. In other words, do those involved in investing and developing capital agree with Piketty’s analysis?

Whereas one should hesitate to place too much value on individual people’s anecdotes, the “real world” rather than outrageously simplified models should be close to any Austrian’s heart on economic theory. After all, we are proponents of causal-realist analysis of the market and economy. So whereas it may not serve as scientific evidence, this comment by well-known investor Marc Andreessen is as interesting as it is revealing about the “socialist calculation” view of the economy held by the likes of Piketty:

The funny thing about Piketty is that he has a lot more faith in returns on invested capital than any professional investor I’ve ever met. It’s actually very interesting about his book. This is exactly what you’d expect form a French socialist economist. He assumes it’s really easy to put money in the market for 40 years or 80 years or 100 years and have it compound at these amazing rates. He never explains how that’s supposed to happen.

The comment, from an interview in Vox, goes to the core mechanistic assumption in Piketty’s system – and shows why it is wrong: it includes neither uncertainty nor entrepreneurship. Sometimes economists would benefit from listening to “the market.”

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Source: MISES INSTITUTE

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How to Make Government Cost More

June 29, 2014 in Economics

By David Howden

Think the government is expensive? It’s about to cost a little more.

The Grow America Act, introduced earlier this month in the U.S. House of Representatives, contains “Buy American” language that would raise U.S. content to 100 per cent by 2018 from 60 per cent now.

The bill, which must pass both the House and Senate, is part of a resurgence of so-called Buy American rules in numerous recent federal spending bills amid angst about the weak economy.

In particular the Act will hurt Canadian manufacturers who specialize in bus and subway cars for American public transit systems.

Notwithstanding the North American Free Trade Agreement, the new Act, if passed, will effectively place a trade embargo on foreign-made goods.

Just think, what would have happened to the cars Americans drive if 30 years ago the government stopped letting foreign cars into the country. Actually, we already have a pretty good test case for this in the old Soviet bloc.

The Grow American Act might appeal to voters who think jobs will come home, but they’ll be wrong. The main result of the Act will be a less trade and a more expensive government.

(Originally posted at Mises Canada.)

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Source: MISES INSTITUTE