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Live Streaming at 7 PM EST: An Evening with Judge Andrew P. Napolitano

July 21, 2014 in Economics

By Ryan McMaken

Presented at the 2014 Mises University; hosted by the Mises Institute in Auburn, Alabama.

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Source: MISES INSTITUTE

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Happy Birthday to a Heroine

July 21, 2014 in Economics

By Ryan McMaken

Lew Rockwell writes:

Today is Bettina Bien Greaves’s 97th birthday. She was Mises’s personal assistant, and she’s still working to teach Austrian economics to new generations. The Mises Institute is honored by her support, as we are all honored to know her. What a great lady. (Thanks to Judy Thommesen)

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Source: MISES INSTITUTE

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The Child Migrant Crisis Is Just the Latest Disastrous Consequence of America’s Drug War

July 21, 2014 in Economics

By Ted Galen Carpenter

Ted Galen Carpenter

The surge of unaccompanied minors coming across America’s southern border has given rise to a humanitarian crisis, and with it, debates about immigration policy and border security. Lost in these discussions, however, is the role the American drug war has played in creating the crisis. And this is only the latest crisis. For decades, Washington’s crusade against illegal drugs has destroyed lives, destabilized civil society and generally wreaked havoc on Mexico and the countries of Central and South America.

Since October, more than 50,000 children and adolescents (mainly from Central America) have successfully made the trek through Mexico to reach the United States. Others have perished at the hands of the drug gangs that control the trafficking routes. Extortion, kidnapping and rape are all-too-common along these routes. Traffickers frequently force refugees passing through Mexico to become drug mules — they’re forced to smuggle small shipments of drugs as they make their way to the United States.

The refugees are fleeing not only grinding poverty but widespread carnage, inflicted mostly by powerful Mexican-based drug cartels and other criminal gangs. Journalists, politicians and pundits have had no qualms about connecting the refugee crisis to the drug cartels. Daily Beast columnist Caitlin Dickson is correct that drug traffickers have made those countries “virtually unlivable for its poorest citizens.” She’s also correct that this creates “an incentive to flee, thereby providing themselves with more clientele for their human smuggling business.” NBC correspondent Luke Russert blamed casual drug users, not just for this crisis but for the widespread devastation the illicit drug trade has inflicted on Latin America.

But as Honduran President Juan Hernandez told Reuters last week, the drug lords would not be able to cause so much chaos if it were not for Washington’s stubborn commitment to drug prohibition. That strategy greatly inflates the street price of drugs and fattens the profits of trafficking organizations. Economists estimate that about 90 percent of the retail price of illicit drugs is due to this “black market premium.” Predictably, when drugs are outlawed, only outlaws will sell drugs. Washington’s policy enriches and empowers the most ruthless traffickers — those willing to use violence, intimidation, and exploitation of the vulnerable to gain market share.

The result has been catastrophic for both Mexico and Central America. Responding to U.S. prodding, Felipe Calderón, Mexico’s president from December 2006 to December 2012, launched a military-led offensive against his country’s drug cartels. That …read more

Source: OP-EDS

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Day 2 of Mises U: Lunch at the Mises Institute

July 21, 2014 in Economics

By Ryan McMaken

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Source: MISES INSTITUTE

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U.S. Should Stay out of Latest Sectarian Civil War: Leave Islamic Radicals to Iraq and Its Neighbors

July 21, 2014 in Economics

By Doug Bandow

Doug Bandow

The rise of the Islamic State of Iraq and the Levant (ISIL) represents a significant failure of U.S. policy. The administration has dispatched nearly 1000 Americans to advise the Iraqi military and protect the U.S. embassy. However, ISIL so far does not pose the sort of security, let alone an existential, threat to America requiring military action.

Although the Baghdad government appears ill-prepared to regain lost territory, ISIL is unlikely to mount another blitzkrieg. The group may stage terrorist attacks in Baghdad, but lacks the strength necessary to capture Iraq’ capital, let alone gain control of majority-Shia nation.

In Syria ISIL radicals face simultaneous military challenges from the government, moderate opposition forces, and even slightly less extreme jihadists. Having declared a caliphate, ISIL also has taken on the political responsibilities of government. Overreach may turn the group’s strengths into weaknesses.

Most important, so far, at least, ISIL, unlike al-Qaeda, has not confronted the U.S. To the extent that the group succeeds in creating a traditional government over a defined piece of geography, it will establish a “return address” for retaliation should it seek to strike America. This suggests a more manageable problem at the moment, at least, than that posed by al-Qaeda in 2001. Thus, Washington should react circumspectly, avoiding further entanglement where possible in a conflict that already has consumed too many American lives and too many American resources.

ISIL so far does not pose the sort of security, let alone an existential, threat to America requiring military action.”

Recent experience offer several sobering lessons useful in confronting ISIL’s rise.

Intervention brings unintended, unpredictable, and uncontrollable consequences. Joining such a conflict in such a region is inherently challenging. Some assumptions will be erroneous, some policies will be mistaken, and some outcomes will be unplanned. Ignoring often enormous differences in history, religion, culture, tradition, ethnicity, interest, and more almost guarantees failure. The result usually is to replace one gaggle of problems with other ones of greater magnitude.

Indeed, America’s experience in the Middle East highlights how one intervention almost always begets another. The 1953 coup against Iranian Prime Minister Mohammad Mossadegh elevated the Shah to full power, leading to his abusive rule and ouster in 1979. That caused Washington to back Iraq’s Saddam Hussein against Iran. In 1990 Hussein acted as we feared Tehran would act, leading to the first Gulf War and a force deployment in Saudi Arabia, which Deputy …read more

Source: OP-EDS

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Reflections on the Misery Index

July 21, 2014 in Economics

By Steve H. Hanke

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Steve H. Hanke

Recently, I calculated misery index scores for 89 countries (see: Globe Asia May 2014). For any country, a misery index score is simply the sum of the unemployment, inflation and bank lending rates, minus the percentage change in real GDP per capita. A higher misery index score reflects higher levels of “misery”.

The calculations I presented earlier represent a snapshot of the state of misery by country for 2013. In what follows, I present scores calculated over time for several regions and a few selected countries in Asia. These allow us to reflect on the scores in terms of their topological patterns.

The first chart shows the misery index patterns by major regions over the past decade. Several things are worth noting. Even on an aggregate basis, the chart features two poles of attraction: one centered at a score of twenty and another at ten. Countries that gravitate towards the higher pole generally need a heavy dose of structural (read: free-market) reforms. Conversely, countries closer to the lower pole have considerably more economic freedom.

Since the financial crisis of 2008-09, Southeast Asia’s level of misery declined from a score of roughly 20 to 11.7, which suggests that there has been positive structural reform in the region. I should also add that quantitative easing by the U.S. Federal Reserve generated significant hot-money flows that positively affected South East Asia.Western Europe’s endemic structural problems also show up in the chart. Since the crisis, the region’s misery score remained elevated because of pronounced problems in labor markets. To bring the score from its current 15.4 reading down to 10, Europe needs some significant economic liberalization.

Let’s now move from regional groupings to individual countries. Indonesia displays an interesting picture. Thanks to the disastrous advice of the International Monetary Fund (IMF), Indonesia floated the rupiah on 14 August 1997. Contrary to the IMF’s expectations, the rupiah did not float on a sea of tranquility. Its value plunged from 2,700 rupiahs per U.S. dollar, at the time of the float, to lows of nearly 16,000 rupiahs per U.S. dollar in 1998. In consequence, Indonesia’s inflation and its misery index score soared, and Suharto was brought down after 31 years in power. Then, the score fell sharply, and since the Wahid government, it has been drifting downward. Changes in Indonesia’s misery index score and its components are displayed in the accompanying table.

At present, Indonesia’s score …read more

Source: OP-EDS

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The Fed Can't Fix What Ails the Economy

July 21, 2014 in Economics

By Gerald P. O’Driscoll Jr.

Gerald P. O’Driscoll Jr.

In Congressional testimony this week, Federal Reserve Chair Janet Yellen pointed to several economic maladies warranting continued activism by the central bank. But what ails the U.S. economy cannot be fixed by monetary policy.

This has been an exceptionally weak recovery when gauged by the labor market. About half of the decline in the unemployment rate can be accounted for by “discouraged workers,” who have dropped out of the labor force and are no longer actively seeking jobs. For that reason, the unemployment rate is increasingly becoming a misleading gauge of the labor market.

It is hubris to claim the Federal Reserve can control variables, like the unemployment rate and labor market weakness, over which they have no systematic influence.”

In Monday’s Wall Street Journal, Mortimer Zuckerman wrote cogently of “The Full-Time Scandal of Part-Time America.” As he put it, “Way too many adults now depend on the low-wage, part-time jobs that teenagers would normally fill.”

Low economic growth is one reason that job growth has been weak. Growth in full-time jobs has also been slowed by Obamacare. The act mandates that employers provide health insurance for those working 30 hours a week or more. The predictable consequence is that employers are reluctant to hire full-time workers. Better two half-time workers than one full-time employee.

There are many other forces at work in labor markets, few of which are influenced by anything the Fed does. Until recently, there were extended unemployment benefits. These discouraged workers from actively seeking jobs. That effect combines with benefits, like food stamps, to act as a tax on taking a job. Casey Mulligan, an economics professor at the University of Chicago, has written extensively on the employment tax. If people don’t take jobs, employment cannot grow.

Some of what occurred in the recession is a continuation or acceleration of trends long in place. The male labor force participation rate has been declining since 1950. It was about 87% then, and is 69.2% today. The overall labor force participation increased for a long time because of rising participation by women. That has flattened now.

The fact that men increasingly do not work has profound social consequences. But, again, this is not a problem that monetary policy can address.

Janet Yellen has long been associated with the belief that the central bank can influence employment. She has also commented on the weakness in current labor markets, and the …read more

Source: OP-EDS

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Why Faster Is Sometimes Better, But Not Always

July 21, 2014 in Economics

By Ryan McMaken

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Mises Daily Monday by Jonathan Newman:

We see that contemporary mainstream economics is in a holding pattern. With no new math problems, the economists have resorted to timing their computers’ efforts to solve the existing math problems… Meanwhile, from my seat in the research wing of the Mises Institute, I’m close to some interesting and — in terms of a connection to real, human market actors — relevant work in economics.

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Source: MISES INSTITUTE

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Photos from the First Night of Mises U

July 21, 2014 in Economics

By Ryan McMaken

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See our Instagram page for more photos.

Jeff Deist welcomes the students. rsz_dsc02009

Joes Salerno introduces the faculty.

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Tom Woods delivers the introductory lecture.

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Mises U students.

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Lew Rockwell with faculty, fellows, and students.

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Source: MISES INSTITUTE

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Riot at the Border

July 21, 2014 in Blogs

By Political Zach Foster

At the foot of the Statue of Liberty are the words “Give me your tired, your poor, your huddled masses yearning to be free…”

In light of this tradition I have nothing but compassion for those who make the long, dangerous trek to this country to work and make an honest living. I believe that honesty and hard work need to be reintroduced in this country where mediocrity and dishonesty so often prevail.

However, I have contempt for those who rioted at the border in mobs and assaulted the Border Patrol. In any other country, foreigners assaulting border guards would be fired on with live ammunition.

It’s WRONG when our government invades sovereign countries without just cause, and it’s WRONG for anyone to bring violence to the borders of another country, including ours.

I believe that a poor migrant looking for sanctuary ought to be given compassion; that rioters assaulting US officials ought to be given rubber bullets; that armed criminal insurgents invading our country ought to be annihilated.

If these rioters are angry, they should direct their rage against the ultra-corrupt government that keeps them in poverty, and against the drug cartels and affiliated gangs that bring hyper-violence to their communities.

Mexico is a country rich with vast natural resources, unique flavors of Western and indigenous culture, and a proud history of ordinary people fighting for freedom. It brings me great sadness to realize that a Mexican’s worst enemy is not an American, but another Mexican.

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Source: ZACH FOSTER RANTS