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Randall Holcombe Interviewed in Italian About His New Textbook

August 4, 2014 in Economics

By Ryan McMaken

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In The Free Market, We recently interviewed Randall Holcombe about his new textbook on Austrian economics for economics students, Advanced Introduction to the Austrian School of Economics. Thanks to Luca Fusari , for translating it into Italian.

Ludwig von Mises Institute: Perché hai deciso di scrivere questo libro?

Randall Holcombe: Ho ricevuto una richiesta dall’editore Edward Elgar se fossi stato interessato a scriverlo, e ho accettato. Volevano un breve libro di circa 50 mila parole che introducesse il pubblico alle idee della Scuola Austriaca, e questo è quello che ho scritto. Il testo scorrevole è di sole 116 pagine, non contando la prefazione, l’indice e un ampio elenco di riferimenti in conclusione. Scrivere il libro è stata un’idea della casa editrice, ci ho riflettuto per un po’ poi ho accettato. Un motivo per cui ero esitante è che, se si parla con un gruppo di economisti austriaci, tutti hanno giudizi diversi sulle idee di base della Scuola. Non volevo scrivere un libro che dicesse, ‘queste sono le più importanti idee della Scuola Austriaca’, e quindi ho avviato un dibattito su ciò che avrei potuto lasciar fuori o non citare in quanto non pertinente. In definitiva ho deciso che i benefici di scrivere il libro compensino tali rischi, così l’ho realizzato.

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Source: MISES INSTITUTE

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Guess Who Built the Roads?

August 4, 2014 in Economics

By Matt McCaffrey

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There’s a great story in the news this week about Mike Watts, a British entrepreneur who’s found a creative solution to one of economics’ most clichéd questions: “Who will build the roads?” Ever since a landslide in February, a section of the A431 roadway between Bath and Bristol has been closed to traffic. The closure has been making life very difficult for commuters—who face dramatically increased fuel costs, driving times, and pollution—and it will take until Christmas before local government will be able to repair the road.

Seeing the trouble caused by the closure, Watts stepped in to solve the problem by building his own toll road to provide a cheaper and more direct route for motorists. The Telegraph reports that “The route, which opened on Friday, is believed to be the first privately-run toll road built in more than 100 years.”

Watts and his wife have been truly entrepreneurial in their venture, which cost £150,000 to build and will require another £150,000 to maintain over the next five months (compared to an estimated £1.5 million to repair the damaged road). But they’re confident they’ve made the right decision both for themselves and local drivers. Unlike the “patrons” of public roads, Watts’ customers know up front how much they have to pay and what to expect for their money. He’s charging £2 per vehicle, and already has 1,250 customers daily. Shockingly, his road is somehow serviceable and drivers are using it even though it hasn’t received approval from local safety inspectors.

In addition to drivers, the new road is also helping other local entrepreneurs, whose revenue fell after the closure limited traffic flow to the area. Increased access is helping to get these businesses back on track, and Watts is even offering a deal where customers who spend £20 or more in the local shops have the cost of their tolls covered.

Of course, given the ease and efficiency of driving on his road, it’s no surprise that the Bath and North East Somerset Council (which is in charge of the local government roads), is trying to persuade motorists not to use it. But consumers are voting with their feet, so to speak, and taking the toll road anyway. Just another example of the market intervening to solve problems of government failure.

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Source: MISES INSTITUTE

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The Original Jersey (Cash Cow)

August 4, 2014 in Economics

By Richard W. Rahn

Richard W. Rahn

This small island, about two-thirds the size of Washington, D.C., with only 100,000 people, is home to one of the world’s largest financial centers.

Americans know of the state of New Jersey, but few know that it was named after the isle of Jersey, which is located in the English Channel about 14 miles off the coast of France. Back in the 1650s, when the English were engaged in a civil war, King Charles II took refuge in Jersey at the manor of George Carteret. After Charles regained his throne, he repaid the kindness by giving Carteret partial ownership of a large land tract in America, which Carteret then named New Jersey in honor of his homeland.

Jersey has been quasi-independent from England since 1204. It is self-governing but swears allegiance to the British Crown — however, not to the British government or Parliament. It is not only a home to global finance, but a tourist mecca as well, with its ancient forts, including some from Viking times, and more modern fortifications built by the Nazis during World War II. (It was occupied by the Germans for five years.) In addition to the fortifications, it has several splendid beaches, a mild climate, lovely pastures — with its own breed of cow, which is now raised around the world (the Jersey, of course).

Financial centers are places where global capital can be accumulated and then invested in their highest and best use anyplace on the planet.”

Jersey has a higher per-capita income than America, and roughly twice the per-capita income of Britain and France. The globe is dotted with relatively small, prosperous places that have become rich without the benefit of natural resources. What have Jersey and the island next door, Guernsey, along with Bermuda, Cayman, Singapore, Hong Kong, and even larger places like Switzerland done right, leaving many of their larger and more richly endowed neighbors plodding along in their economic dust? In one sentence, they have kept their governments relatively small and not wasted the efforts of their citizens with counterproductive government programs and excessive regulations and high taxation.

Critics of places such as Jersey call them “tax havens,” which implies that the jurisdictions have few or no taxes. All of the so-called tax havens have plenty of taxes that provide for education, infrastructure and a social safety net, often greatly superior to the big-government, high-tax jurisdictions. …read more

Source: OP-EDS

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North Korea Is Angry with America, Again! Why Has Washington Kept South Korea as a Welfare Dependent?

August 4, 2014 in Economics

By Doug Bandow

Doug Bandow

The Democratic People’s Republic of Korea is angry with the U.S. again, citing all manner of crimes and misdemeanors. To emphasize its point the DPRK is prosecuting two Americans for “hostile” behavior.

Why is North Korea worried about Washington? Because the U.S. military remains deployed in the South 61 years after the end of the Korean War. Washington has turned the otherwise successful Republic of Korea into an international welfare queen, apparently forever stuck on the U.S. defense dole.

It’s time for the ROK to graduate and America to leave the Koreans solve their own problems.

Last week North Korea’s deputy UN ambassador, Ri Tong-il, gave a press conference denouncing Washington in florid terms. U.S. behavior “is reminding us of the historical lasting symptoms of a mentally retarded patient,” said Amb. Ri.

His list of grievances was long. It included Ulchi-Freedom Guardian, the latest annual military exercise between America and South Korea. Amb. Ri also complained that Washington was sabotaging improved inter-Korean relations and ignoring Pyongyang’s proposals for reducing tensions on the peninsula.

He requested an emergency meeting of the UN Security Council to discuss the threat allegedly posed by Ulchi-Freedom to peace and security. Unfortunately for the DPRK, the U.S. is the leading permanent member and Seoul is a rotating member this year, so no action is expected. Which merely exposes how the UN “has lost its principles, impartiality and responsibility,” complained Amb. Ri. Actually, the international body never has manifested those principles.

At greatest risk are three Americans currently held in the North. Kenneth Bae is serving a prison term, apparently for promoting Christianity while visiting. Two other tourists have been arrested in recent months and face trial. Pyongyang has been using them as bargaining chips in an attempt to get America’s attention.

Although it’s tempting to dismiss Amb. Ri’s dyspeptic remarks, he made a legitimate point when justifying his nation’s nuclear program: “No country in the world has been living like the DPRK, under serious threats to its existence, sovereignty, survival.” There is much not to like about North Korea, but even paranoids have enemies.

In any war the North would face South Korea, which has vastly outstripped Pyongyang on virtually every measure of national power, and the U.S., the globe’s superpower. East Asia is filled with additional American allies, while the North’s Cold War partners, Moscow and Beijing, have drifted away and almost certainly wouldn’t help in a conflict. Impoverished, bankrupt, and alone …read more

Source: OP-EDS

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America Cannot Save Ukraine: Why MH17 Changes Nothing

August 4, 2014 in Economics

By Doug Bandow

Doug Bandow

The agony of the families of the 298 people who died on flight MH17 lives on. Unfortunately, however, even a thorough crash investigation might not solve the mystery as to who shot down the plane.

The downing of the Malaysian airliner created shock and calls for stronger action against Russia and its separatist clients in Ukraine. But the tragic shootdown, though an atrocity, changes nothing in practice. Indeed, the United States has little credibility in complaining about foreign interference or errant attacks on civilians.

American intelligence reportedly concluded that Russian separatists mistook the flight for a Ukrainian military plane, which seems most likely. By their own claims, they had Buk missiles, whether captured from Ukraine or provided by Russia. Moreover, they claimed to have downed a Ukrainian transport plane and had been shooting down Ukrainian planes with some regularity. But the rebels would gain no advantage from intentionally downing a foreign airliner.

Nevertheless, likely isn’t certain. In 2001, the Ukrainian military inadvertently downed a Russian airliner when an antiaircraft missile fired as part of an exercise missed the target drone. Still, the Ukrainian military had no cause to be firing antiaircraft missiles, since the separatists possess no air force. Kiev would gain from pinning a civilian shootdown on the insurgents. However, exposure of a Ukrainian “false flag” operation would have devastating consequences, and likely would deter serious consideration of such a course.

The situation facing Ukraine is tragic, but not one of strategic significance to America.”

So, absent contrary evidence, policy makers should assume that the separatists did it, perhaps with missiles supplied from Russia. If so, then what to do?

Almost immediately after the incident in Ukraine, America’s hawks began stoking the war machine. Sen. John McCain said involvement of Russia or Russian separatists in the plane’s shootdown “would open the gates for us assisting, finally, giving the Ukrainians some defensive weapons [and] sanctions that would be imposed as a result of that. That would be the beginning.” Given the Senator’s propensity for calling for war, who knows what the end would be.

The better answer, however, remains to do largely nothing. The MH17 incident, while outrageous, actually is no trigger for anything. Errant attacks on civilians, while always tragic, are not unusual.

There were several mistaken downings of civilian airliners in World War II. The People’s Republic of China shot down a Hong Kong airliner …read more

Source: OP-EDS

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Washington Still Can't Pick Foreign Clients

August 4, 2014 in Economics

By Ted Galen Carpenter

Ted Galen Carpenter

As Afghanistan’s corrupt president, Hamid Karzai, slinks away into retirement and Iraq’s hapless prime minster, Nouri al-Maliki, desperately tries to keep his job despite the onset of civil war, Washington’s faulty judgment about foreign clients is again on display. It is hardly a new development. U.S. political leaders are about as successful at selecting such clients as they are at picking entrepreneurial companies to back financially. Time and again we encounter the foreign policy equivalent of the Solyndra fiasco.

Indeed, the debacle involving Maliki is not even the first time that Washington has woefully misconstrued the political situation in Iraq. During the prelude to the U.S.-led invasion and occupation, Bush administration officials assumed that Ahmed Chalabi was the undisputed leader of the Shiite majority and the George Washington of his country. U.S. policymakers seemed to believe that Chalabi would become Iraq’s new leader virtually by acclamation. How badly American would-be nation builders misread the situation became evident in 2005 in Iraq’s first parliamentary election when Chalabi’s party won barely 0.5 percent of the vote and failed to win a single seat in parliament.

It is difficult enough to assess the political strengths of players in one’s own country; it is vastly more difficult to do so in foreign countries where our knowledge of the politics and the underlying culture is far more limited.”

U.S. leaders have not displayed much better judgment regarding political developments in other regions. Washington was ecstatic about Ukraine’s supposedly pro-Western Orange Revolution in 2004 and the emergence of Viktor Yushchenko as the country’s new president. In this case, at least the chosen U.S. client started out with considerable domestic backing. Once again, though, U.S. officials managed to pick a leader whose political support evaporated with stunning speed. In the 2007 midterm parliamentary election, his party won merely 14 percent of the vote. When Yushchenko himself ran for re-election in 2010, following a record of corruption rivaling that of the pro-Russian rivals he had denounced and displaced, he garnered a paltry 5.5 percent.

Washington repeatedly miscalculates the extent of domestic support that its preferred clients actually enjoy. Worse, U.S. enthusiasm often seems to peak when its proxies are on the brink of disaster. During a 1981 visit to Manila, Vice President George H.W. Bush lavishly praised Philippines dictator Ferdinand Marcos. “We stand with you sir … We love your adherence to democratic principle and to the democratic processes.” Barely four years later, massive anti-regime demonstrations forced Marcos to relinquish power and flee the country.

But Bush’s judgment of Marcos’s prospects was astute compared to Jimmy Carter’s shocking failure to understand the precarious …read more

Source: OP-EDS

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Video: Jörg Guido Hülsmann Examines the Cultural Consequences of Fiat Money

August 4, 2014 in Economics

By Mises Updates

Archived from the live broadcast, this Mises University lecture was presented at the Mises Institute in Auburn, Alabama, on 26 July 2014.

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Source: MISES INSTITUTE

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Our Weird Energy Politics

August 4, 2014 in Economics

By Patrick J. Michaels

Patrick J. Michaels

What is it about the weather that compels our government to ineptly dictate how we produce electricity and consume energy? This a worthwhile question to ask on August 4, the anniversary of the day in 1977 that President James Earl Carter signed legislation creating the brand-new, Cabinet-level Department of Energy.

When it comes to energy fecklessness, which was very costly to the Democratic party in the revolutionary election of 1980, Barack Obama’s policies are in Mr. Carter’s league. With global warming at the top of the president’s agenda and at the bottom of the electorate’s, a similar result may be brewing.

A trip back to 1977 reveals remarkable similarities between then and now, and some remarkable symmetries. Three consecutive winters, starting with the winter of Carter’s inauguration, were the coldest trio since comprehensive instrumental records were first kept in 1895. To show his new administration’s environmental sanctity, Carter had a solar-heated reviewing stand built for his inauguration. Wind chills were even lower than they were at Obama’s first inauguration. The stand was so cold that very few people stuck around after the ceremony.

When it comes to energy fecklessness, Barack Obama’s policies are in Jimmy Carter’s league.”

A week later, the lights went out in Ohio and Pennsylvania, thanks to a shortage of natural gas. The Ohio River froze so completely that people walked across from Cincinnati to Kentucky.

Less than 90 days after his inaugural, Carter addressed the nation wearing a sweater and called the “energy crisis” the “moral equivalent of war” (wags soon acronymed it MEOW). He told the American people he was convinced that the nation faced “the impending crisis of energy shortages” as we ran out of natural gas and oil. It was in this speech that Carter proposed the new Department of Energy, which was intended to guide the nation to energy abundance and independence, shifting us to an energy mix of coal, nuclear (which he regularly pronounced “noo-kie-er”), and — despite everyone’s freezing at his inaugural — solar.

During the election campaign Carter’s handlers had sold him as a “nuclear engineer” who had an M.S. from Union College in New York. He wasn’t and he didn’t (although he did take some classes at Union College in Schenectady), nor did he serve on the USS Seawolf, the nation’s second nuclear sub. He never set the record straight, and he used the inflated biography to bolster …read more

Source: OP-EDS

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The Young and the Restless in Beijing

August 4, 2014 in Economics

By Doug Bandow

Doug Bandow

Everything in China appears is big. The population is big. The cities are big. The people’s aspirations are big. The state’s ambitions are big.

The battle over the future also is big.

I recently returned from several days in the People’s Republic of China. It’s always a fascinating place with a future as yet unresolved. The country is growing economically, but no one really believes the government’s statistics. The “one child” policy has created a birth dearth that may leave the PRC old before it grows rich. Rising domestic confidence has yielded growing regional assertiveness, sparking an ever stronger negative reaction from once complacent neighbors.

Almost certainly Beijing will end up an influential global player. But when—and whether—it will battle America for world domination is far less clear. The PRC’s international future is not yet determined.

The PRC’s international future is not yet determined.”

Neither is China’s domestic destiny. Politics remains authoritarian, and it isn’t obvious that democracy would yield a meek and mild Beijing. Nationalism could become an even more dangerous force without the current government’s power to close off discussion. Nor do wealthier and better educated urban residents necessarily want to share power with the mass of farmers and rural dwellers who dominate the PRC’s interior.

Nevertheless, the young are restless. Those I met had little patience with the Communist Party’s monopoly of power and determination to censor. Many hoped to go to America for school, for both its educational opportunities and personal freedoms. Moreover, they weren’t afraid to speak out in front of others.

For instance, there is a legislature in Beijing, the National People’s Congress, which meets briefly every year to ratify important CCP decisions. The assembly uses a spacious building alongside Tiananmen Square; every province has a room to decorate in order to showcase local culture. The Great Hall of the People hosts tours when the NPC is not in session (and no one else is filling in), which is most of the time. The empty hall thus contributes more to Chinese well-being than does the NPC.

I was talking with some students about economic policy and how politics works (and fails!) in America. One young man blurted out: “I prefer elections, like in America for Congress.” He apparently was less enthused about the NPC. I avoided an Oprah-like “how does political repression make you feel?” since I had been asked to steer clear of controversy. However, …read more

Source: OP-EDS

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When State-Subsidized Industries Attack

August 4, 2014 in Economics

By Mises Updates

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Mises Daily Monday by Dave Albin:

The corn, sugar, and ethanol industries in the US are all part of a complex system of government subsidies and other favors. Not surprisingly, these laws and regulations often cause conflicts between industries that would have not existed in a free marketplace.

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Source: MISES INSTITUTE