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Audio: Mark Thornton on the Scott Horton Show

August 11, 2014 in Economics

By Ryan McMaken

From ScottHorton.org (August 4, 2014): Mark Thornton, Senior Fellow at the Ludwig von Mises Institute, discusses how central banks hide the true costs of war and the narrow segment of society benefiting from the “jobless recovery.”

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Source: MISES INSTITUTE

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Audio: Matt McCaffrey on the Economics of Toll Roads

August 11, 2014 in Economics

By Ryan McMaken

Matt McCaffrey follows up this article with a conversation with Paul Molloy of the Freedom Works podcast.

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Source: MISES INSTITUTE

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SSDI: Time for Reform

August 11, 2014 in Economics

By Jagadeesh Gokhale

Jagadeesh Gokhale

The just-released Social Security Trustees’ annual report projects that Social Security’s Disability Insurance (SSDI) component will become insolvent sometime during 2016 — leaving not much time for reform deliberations. Recent instances of SSDI fraud have concentrated the minds of lawmakers in Congress. Beyond combating SSDI fraud, however, Congress can use this opportunity to adopt sensible SSDI reforms to improve the lives of individuals with disabilities.

Evidence of behind-the-scene activity on Capitol Hill on SSDI reforms is beginning to emerge. Based on recent Congressional hearings, lawmakers appear highly dissatisfied with how the SSDI program is working. Many are focused on combating SSDI fraud but appear reluctant to adopt more comprehensive reforms.

A few facts on SSDI:

Beneficiaries currently number 11 million and the system admits about 1 million new beneficiaries into the program each year. Current annual SSDI expenditures run at $140 billion. Most significantly, enrollments have consistently exceeded the agency’s projections during the last several years, suggesting strong incentives among those with medical impairments to quit work and apply for SSDI benefits.

SSDI applicants must provide evidence of a medical impairment that prevents work above the Substantial Gainful Activity (SGA) level of earnings — currently $1,070 per month — one that is expected to last for at least 12 months or result in death. This condition means a decision to apply for SSDI compels exit from the work-force.

Evidence from the last several recession episodes shows that such enrollment surges were not reversed during the last three recessions once the economy recovered and unemployment abated.”

The existence of a qualifying medical impairment is judged according to “medical listings” — severity of medical conditions that applicants must “meet or equal.” Failing that, applicants may still be admitted to the program for demographic and vocational reasons such as age, education, job skills, job availability in the applicant’s occupation or other occupations, and so on. These criteria induce SSDI applications and allowances to accelerate during recessions.

Evidence from the last several recession episodes shows that such enrollment surges were not reversed during the last three recessions once the economy recovered and unemployment abated. This despite no increase in the population’s share of those with medical impairments, improved technology in assistive devices, and an improved legal environment for accommodating those with medical impairments in the workplace.

Once allowed onto the program, many beneficiaries are reluctant to return to work for fear of losing SSDI’s cash …read more

Source: OP-EDS

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New Hoppe Book Coming this Fall!

August 11, 2014 in Economics

By Mises Updates

Hoppe

Dr. Hans-Hermann Hoppe, Distinguished Fellow at the Mises Institute, counts among the greatest Austro-libertarian intellectuals alive today. Like his friend and mentor Murray Rothbard, Hoppe’s work in economics, philosophy, history, law, and social theory is legendary. And like Murray, his new books, articles, and speeches are widely anticipated by fans around the world.

Dr. Hoppe recently provided us with a new manuscript and asked the Mises Institute to serve as publisher. It’s a brief but devastating exposition of governance across human history, from the establishment of privileged aristocracy to the divine right of kings to popularized democracy. In one sense the manuscript serves as a synopsis of arguments made in Dr. Hoppe’s seminal book, Democracy: The God That Failed.

Hoppe pulls no punches, arguing that conflict resolution monopolized by a central state has never been just, efficient, or intellectually defensible. Contracts between rulers and ruled, whether implied or expressed (e.g., in the form of constitutions) are meaningless when states or kings are the final arbiters of those contracts.

Monarchs, for all their failings and unearned privilege, at least have an incentive to maintain, if not increase, the capital stock of their territories. Democratically-elected politicians, by contrast, have every incentive to maximize plunder during their limited time in office. The end result of democracy is the inexorable growth of central states, complete with ruinous taxation, monetary debasement, and warlike tendencies. It’s a Hoppean “tale of moral and economic folly and decay.”

Like Democracy: The God That Failed, Dr. Hoppe’s new work is vitally important. It represents Hoppe at his best: calmly and methodically skewering sacred cows.

But the Mises Institute does not own the rights to Democracy, and as a result the book never received the attention it deserves. Nor has it been released in an eBook format, which is sorely needed.

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We plan to offer Dr. Hoppe’s new book in both printed and eBook form, making it very affordable and accessible to all. In fact, this new title will be the least expensive Hoppe book in print! The Mises Institute will distribute it widely at no cost to students and college organizations. And Dr. Gordon has agreed to provide an introduction.

We also plan to publish Dr. Hoppe’s new manuscript in a broader volume tentatively entitled The History of Man: An Austro-Libertarian Reconstruction. This new book will combine previously-released chapters from Hoppe addressing the rise of family structures, the development …read more

Source: MISES INSTITUTE

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The Media, the S&L Crisis, and the 2008 Financial Crisis

August 11, 2014 in Economics

By Ryan McMaken

081008_s_wilmsen_silverado

Going to journalism school does nothing to prepare journalists to write on economics and finance, and not surprisingly, it is exceptionally difficult to find people who are both excellent writers and knowledgeable about economics. Henry Hazlitt is of course a notable exception (he never went to college) as is James Grant. (Grant, by the way has a new book due out later this year on the Depression of 1921.)

In today’s Mises Daily, Dale Steinreich mentions how one of the main obstacles to understanding the S&L crisis is the fact that most of the people in the media who worked on the issue were incapable of understanding the problem as anything more than a failure to regulate (read: government regulation) the economy properly. In the minds of people with no significant economics training or knowledge (i.e., most journalists) economies can be made to do whatever people want them to do, simply by issuing government edicts. So, if more mortgages should be granted in low income neighborhoods, the government shall simply issue a command that it shall be so. What could go wrong? If something does go wrong it is because people didn’t follow the regulations or because government agents weren’t vigilant enough.

Speak to most journalists (especially ones who like to cover political beats) about the problem of economic calculation or the role of the price system, and you’ll receive a blank stare. (I’ll be the first to admit that there are lots of smart local business reporters out there who are actually interested in this sort of thing, though.)

Nonetheless, a perfect illustration of this blind spot for the complexities of markets and economics is a little book about the Silverado Savings and Loan called Silverado: Neil Bush and the Savings and Loan Scandal. Remember Silverado Savings and Loan? It was notable for two reasons: when it went under, about $1 billion disappeared. Back then, that was a lot of money, and it marked Silverado one of the biggest S&Ls to collapse. The other reason Silverado made headlines was Neil Bush was a member of the board.

The book Silverado is by a person named Steven Wilmsen who now works the metro beat at the Boston Globe, working on local personal interest stories about murders and immigrants, which tells you something about  how interested he is in the financial system. The title of the book implies it is largely about Neil Bush, …read more

Source: MISES INSTITUTE

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The Savings and Loan Debacle: Twenty-Five Years Later

August 11, 2014 in Economics

By Mises Updates

fslic2

Mises Daily Monday by Dale Steinreich:

The Savings and Loan Crisis is now twenty-five years old, and while it now seems like ancient history to many, many more still blame “deregulation” for the financial disaster that was caused by an intricate web of federal laws and regulations.

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Source: MISES INSTITUTE

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America's Brain Dead Policy toward the Korean Peninsula: Time for South Korea — and Japan — to Develop Nuclear Weapons?

August 11, 2014 in Economics

By Doug Bandow

Doug Bandow

U.S. foreign and defense policy long has been brain dead. Whatever has been must ever be seems to be the Pentagon’s mantra. That’s certainly the typical response to the idea that Washington should bring home its troops and allow South Korea to defend itself.

The argument is simple. The Republic of Korea has grown up and surged past the North. Ahead of Pyongyang on every important measure of national power save quantity of military manpower and materiel, the ROK should use its abundant wealth and larger population to close that gap as well. Just as most Americans expect those on welfare to get a job to take care of themselves and their families.

Perhaps there are good arguments against the proposal. But I have yet to hear them. Instead, what dominates is the tyranny of the status quo. Change a policy developed 61 years ago? Horrors! So what if the world has changed dramatically over the same period.

The dimmest and laziest response is that the Democratic People’s Republic of Korea has a big military. If that’s enough to justify America’s “mutual” defense treaty with the ROK, then Washington should defend China and Russia as well. After all, Pyongyang has a big military. But equally important is the other side of the equation. Both China and Russia have bigger, better equipped, and more deadly militaries.

Why doesn’t South Korea do whatever is necessary to deter the DPRK? I’ve never had a South Korean tell me that his nation couldn’t match the North. I’ve had plenty of South Koreans tell me that they didn’t want to match the North. And, of course, they would be fools to do so if they didn’t have to. After all, as one told me a few years back, “we have health and education needs.”

No doubt. But so do Americans. The question for Washington is, why should U.S. officials sacrifice the health and education needs of Americans to subsidize the defense of South Koreans? In the early years it was to enable the ROK to recover economically and develop into a self-sufficient country. But that policy succeeded decades ago. Why must Americans continue to put the health and education needs of South Koreans ahead of their own?

Which leads to the second rejoinder. Eliminating the Korean commitment wouldn’t save much money. That is true if Washington simply redeployed its troops to America. But that ignores the relationship between security guarantees and …read more

Source: OP-EDS

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Switzerland, a Country That Works

August 11, 2014 in Economics

By Richard W. Rahn

Richard W. Rahn

Geneva | Switzerland is not perfect, but as countries go, it is hard to find one that is much better. The more people know about Switzerland, the higher regard they tend to have for it. By almost any measure of human accomplishment, and particularly in creating a most successful country governance model, the Swiss are clearly No. 1 in the world.

Switzerland is a small, landlocked nation without much in the way of natural resources. It has managed to stay out of wars for two centuries and developed a long-term multilingual and multireligious democracy without strife. There is a rule of law with competent and unbiased judges and strong protections for private property.

Among the countries of the world, Switzerland ranks No. 1 in “life satisfaction” (Organization for Economic Co-operation and Development’s Better Life Index); No. 1 in “global competitiveness” (World Economic Forum’s Global Competitiveness Index); No. 2 in “labor -force participation rate” (OECD Labor Force Statistics); No. 3 in “happiness” (United Nations World Happiness Report); No. 4 in “economic freedom” (Fraser Institute and Cato Institute Economic Freedom of the World Report); No. 7 in “per-capita income” on a purchasing-power parity basis (International Monetary Fund World Economic Outlook); No. 2 in “overall prosperity” (Legatum Institute’s Prosperity Index); and No. 1 in “life expectancy at birth” (OECD Better Life Index).

Switzerland also ranks higher than average among the OECD countries (the 35 most-developed economies in the world) in levels of education and student test scores, and has lower levels of air and water pollution. Civil liberties are strongly protected, including freedom of speech, religion, press, assembly and even the right to own guns. It does not get much better than this.

The Swiss have also avoided creating the “cult of personality” around their elected leadership. The elected rulers of Switzerland are not well known by their own countrymen and are almost invisible to the rest of the world. History is replete with leaders who had too much power and visibility. Perhaps the reason the Swiss have made fewer economic and foreign-policy mistakes than other countries is, in part, because they do not have very powerful leaders who can push through bad policies.

Many view the Swiss system of direct democracy as cumbersome, but as a Swiss friend once told me: “It is not that we Swiss are smarter than others, but given our political system, by the time we get around to making …read more

Source: OP-EDS

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The Credibility Debate in U.S. Foreign Policy

August 11, 2014 in Economics

By Benjamin H. Friedman

Benjamin H. Friedman

Last Tuesday’s Washington Post featured an op-ed by Senator Bob Corker (R-Tenn) blasting President Obama for his shaky support for those we are helping in Syria, Libya and Ukraine. Corker worries that the president’s unreliability undermines U.S. credibility to defend U.S. partners and allies everywhere.

It’s true; President Obama offers far more rhetorical than actual support for his preferred side in those conflicts. Pretty much everything else in the op-ed is wrong. Because Corker’s argument is so common in Washington, especially in the Post, yet theoretically confused and historically bunk, it’s worth occasionally refuting.

A good rule of thumb for foreign policy is that if someone tells you our credibility depends doing something, it’s probably a bad idea.”

The basic reason Corker is wrong is that talk is cheap, and everyone knows it. In U.S. foreign policy, presidents typically drum up support for even minor actions with soaring talk about its strategic and moral importance. But most people, especially statesmen, understand that interests vary across time and circumstances, even if rhetoric is similar. Historical studies show that leaders deciding whether to defy foreign threats focus on the balance of military power and the material interests of the threatening state, not on its opponent’s record of carrying out past threats. Credibility doesn’t travel well.

That is why the domino theory was wrong. Neither the West Europeans we were defending during the Cold War, nor their Warsaw Pact adversaries believed that U.S. withdrawal in Vietnam would mean U.S. abandonment of Europe’s defense. The same goes for other U.S. military actions in the last several decades that ended badly—for example, the Marine deployment to Lebanon under President Reagan and the recent war in Iraq. Presidents initially offered big talk about goals. Later, we quit without having reached those goals. Contrary to claims of credibility hawks, other U.S. allies did not lose faith in American military power or come under attack from emboldened foes. Instead, new supplicants continued to ask for our help. Often, when it was not forthcoming, or too limited for U.S. hawks, they insisted that we would lose credibility if we did not do more. They always proved wrong.

Corker’s argument is also contradictory. If U.S. credibility is as fragile as Corker’s argument suggests, we should avoid extending it profligately. Because our limited interests in most places prevent us …read more

Source: OP-EDS

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Sorry, Washington: "Not Everything in the World Is about America"

August 11, 2014 in Economics

By Doug Bandow

Doug Bandow

The foreign-policy meme is firmly fixed that President Barack Obama is weak and virtually every ill around the globe is a result thereof. The Chinese, Egyptians, Iranians, Russians, Syrians and assorted terrorists are all running wild and committing violent misdeeds because the administration exhibited a lack of resolve and failed to enforce U.S. dictates. The world would be quiescent if only Sen. John McCain had won in 2008 and since then had been sending American bombers hither and yon to suppress the slightest resistance to America’s will.

It’s hard for the denizens of Washington to accept, but not everything in the world is about America. People elsewhere around the globe have interests, aspirations, ambitions, and dreams. And like the obstreperous British colonists in North America more than two centuries ago, other peoples are willing to take big risks, undertake enormous sacrifices, and defy major powers in order to achieve their ends. What the U.S. president says often isn’t of much interest to foreigners, other than to antagonize and inflame.

Government and guerrilla leaders may worry more about what Washington thinks, but they judge the likelihood that American leaders will follow through on the latter’s promises and threats. And that is based far more on a perception of U.S. interests and relative costs and benefits than abstract “credibility” derived from past behavior in dissimilar circumstances.

President Barack Obama’s foreign policy doesn’t impress. But not for lack of ‘will’ or ‘credibility.’”

Washington routinely promotes human rightsendorses democratic elections,advances free trade, urges religious liberty and more. In no case has America ever gone to war to enforce such pronouncements. The United States rarely settles even more serious geopolitical controversies with war. Absent a McCainesque president prepared to bomb anyone for any reason, nothing would have changed had President Obama, for instance, launched military strikes in response to Syria’s use of chemical weapons. No other country would have feared military attack for completely different reasons.

More actively backing Syrian rebels would not have caused Russia’s Vladimir Putin to treat Ukraine with loving kindness. What happens to the Damascus government matters to Moscow, but not enough to confront America. In contrast, what happens to Ukraine matters to Washington, but not enough to confront Russia, for which the issue is considered an essential matter of security. The United States might be willing to attack another largely helpless Middle Eastern state …read more

Source: OP-EDS