You are browsing the archive for 2014 August 22.

Avatar of admin

by admin

State Monopolists Don’t Work for You

August 22, 2014 in Economics

By Robert Higgs

1280px-US_Customs_and_Border_Protection_officers

I see that some people have become a bit upset with how the police are conducting themselves recently. They declare that the police need to be reminded that “they work for us, not the other way around.” This statement expresses an utterly naive and untutored idea.

The police don’t work for us, if by “us” we mean you, me, and at least 95 percent of the rest of the population. On the contrary: we work for them, literally; we work to earn money and acquire wealth that they take forcibly from us for their own support, either by taxation or by outright confiscation (civil forfeiture). The cops don’t work for us; they never worked for us. They work now, as they have always worked, for the government, which is to say, for the small part of the population that has any nonnegligible control over the government at any level — federal, state, or local. Certainly no more than 5 percent of the population has any such control. More likely the percentage is 1 percent or less of the population.

…read more

Source: MISES INSTITUTE

Avatar of admin

by admin

The Mythical “Wealth Effect”

August 22, 2014 in Economics

By Jeff Deist

bernanke

Seeking Alpha has a nice article debunking the tired “wealth effect” concept. We see this phony phrase trotted out endlessly, but it’s helpful to understand it as combining both Keynesian and Monetarist elements:

Higher equity prices will boost consumer wealth and help increase confidence, which can spur spending. — Ben Bernanke, 2010

Across all financial media, between both political parties, and among most mainstream economists, the “wealth effect” is noted, promoted, and touted. The refrain is constant and the message seemingly simple: by increasing people wealth through rising stock and housing prices, the populace will increase their consumer spending which will spur economic growth. Its acceptance is as widespread as its justification is important, for it provides the rationale for the Federal Reserve’s unprecedented monetary expansion since 2008. While critics may dispute the wealth effect’s magnitude, few have challenged its conceptual soundness. Such is the purpose of this article. The wealth effect is but a mantra without merit.

The overarching pervasiveness of wealth effect acceptance is not wholly surprising, for it is a perfect blend of the Monetarist and Keynesian Schools.While its exact parentage and origin appears uncertain, its godfather is surely Milton Friedman who published his permanent income theory of consumption in 1957. In bifurcating disposable income into “transitory” and “permanent” income, Friedman argued the latter dictates our spending and consists of our expected income in perpetuity. If consumer spending is generated by expected income, then surely it must also be supported by current wealth?

…read more

Source: MISES INSTITUTE

Avatar of admin

by admin

How to Help the Mises Institute on Facebook

August 22, 2014 in Economics

By Ryan McMaken

facebook_post

As you probably know, Facebook is constantly changing its methods of deciding which posts you see and which you don’t see. Privacy settings change constantly as do settings for your news feed. It difficult to say exactly how these changes affect the number of people who see our Mises Institute Facebook posts, but you can help us extend our reach and the number of posts you see from us. A little known fact is that Ludwig von Mises himself pioneered the “thumbs up” gesture (see photo below), which was in turn adopted by hard-core Misesian Mark Zuckerberg for use on Facebook. Well, that remains unconfirmed, but what is definitely true is that one of the easiest things you can do to make sure more people see our posts is to simply like and share our posts as you see them in your news feed. But there’s more you can do as well.  This graphic below shows you two ways you can help us on Facebook. First, go to our Facebook page at https://www.facebook.com/mises.institute, and then:

…read more

Source: MISES INSTITUTE

Avatar of admin

by admin

A Free Market Case for Independence: Let’s Make Scotland Like Hong Kong

August 22, 2014 in Economics

By Ryan McMaken

200px-Map_of_Scotland_within_the_United_Kingdom.svg

Alasdair Macleod makes a sensible recommendation. This article originally appeared on City A.M.:

“A free market case for independence: Let’s make Scotland like Hong Kong”

by Alasdair Macleod

In September, Scottish residents will vote in the independence referendum, following months of intense political debate between the Yes and No campaigns. Even statements presented as purely financial or economic in nature have not been based on proper facts or sound analysis. The Scottish National Party is pursuing an inherently emotional case, while the Westminster establishment is employing scare tactics: Scotland should hold on to nurse for fear of something worse.

There is no reason why 5m Scots cannot do far better as an independent nation, but it will require that they ditch both welfare dependency and subsidies, and embrace reality. Get it right and Scotland’s diaspora, many of whom have abandoned Scotland’s parochial, socialistic shores for free markets elsewhere, would be back like a shot.

In leaving the UK, Scotland would establish its own constitution. The country could give greater protection to property rights, while reducing the scope for political intervention in economic and business affairs. Its own legal system gives Scotland a head start in this process. Contrary to the threats from Westminster about not keeping the pound, an independent Scotland could run a currency board pegging the new local currency to sterling or even the euro, providing the restraints for monetary stability. The prize for the taking is that Scotland could become an entrepot centre in its own right.

This is the basic formula behind Hong Kong’s success. Remember that Hong Kong emerged from the rubble of Japanese occupation in 1945, and has climbed a far higher mountain than that faced by Scotland. There’s no reason (from a purely economic point of view) why Scotland cannot be a roaring success as an independent nation, as long as it embraces free markets, rejects state intervention and provides legal security.

Unfortunately, the majority of Scottish voters view things very differently. They believe North Sea oil will be part of the independence settlement, and that oil and whisky revenue will pay for welfare and pensions. They hanker after increased socialisation of the means of production, providing an intellectual gloss for the unthinking majority that simply wants more for less. But independence means giving up the security of the Union, and (under the Barnett formula) the subsidy of English taxes.

On figures published in the Treasury’s Public Expenditure Statistical Analysis …read more

Source: MISES INSTITUTE

Avatar of admin

by admin

Ron Paul, the Gateway Drug

August 22, 2014 in Economics

By Ryan McMaken

 Jessica Pavoni explains how she came to know Mises, Rothbard, and the rest:

At that point, Hubby and I had more than six deployments between us, so we were credible listeners. Even more impressive: here was a guy [Ron Paul] who wasn’t toeing the party line, wasn’t kowtowing to pressure, and was actually speaking common sense! Look up any video of any presidential debate in which Dr. Paul takes part, and it’s abundantly clear that he is no politician (this is a compliment in my book). It’s safe to say that listening to his position on foreign policy was the first step down the rabbit hole; I didn’t fully understand every issue that he spoke about, but his words came through like a clear bell. Who was this guy? Where did he come from? What did he know? I was hooked.

We bought a book – Liberty Defined (highly recommend it – short, sweet, and easy to understand). I felt myself being pulled out of the apathetic, unconscious masses, and started to wake up. I started to care, I wanted to learn, and I needed to understand how the United States had found itself in the position of being mired in warfare, welfare, and eroding individual liberties. I had seen warfare; I had lost friends. These things mattered. This was real life happening. Dr. Paul was the first person to shed light on the root causes and offer an alternative system.

We began to research the great thinkers, writers, and economists that Dr. Paul referenced. We discovered Murray Rothbard (For a New Liberty and Ethics of Liberty), Ludwig von Mises (Human Action, LvMI), Lysander Spooner (Vices Are Not Crimes and No Treason), Frederic Bastiat (The Law), Peter Schiff, Ivan Eland, Lew Rockwell, and countless others. Over the course of 18 months, I progressed slowly but steadily from conservative neocon (I joined the military in the first place, right?) to limited-government proponent, to minarchism, and then finally the logically-deduced, well-researched, sound philosophy of anarcho-capitalism (self-ownership and non-aggression).

…read more

Source: MISES INSTITUTE

Avatar of admin

by admin

Keeping Score on the Libya Intervention: Good Idea or Tragic Mistake?

August 22, 2014 in Economics

By Justin Logan

Justin Logan

On April 22, 2003, at the American Enterprise Institute, Washington Postcolumnist Charles Krauthammer remarked:

“Hans Blix had five months to find weapons. He found nothing. We’ve had five weeks. Come back to me in five months. If we haven’t found any, we will have a credibility problem.”

In response, the Crooked Timber blog declared April 22 “Krauthammer Day,” so that each year we could reflect on Krauthammer’s perspicacity and the powerful sense of accountability and stewardship that pervades America’s foreign-policy establishment.

In that spirit, I suggest we declare August 24 “Slaughter Day,” to commemorate former State Department director of policy planning Anne-Marie Slaughter’s August 24, 2011 Financial Times piece entitled “Why Libya Sceptics Were Proved Badly Wrong.” According to Slaughter, “the real choice in Libya was between temporary stability and the illusion of control, or fluidity and the ability to influence events driven by much larger forces.” Having chosen the latter, Slaughter said, it wasn’t too early to judge the Obama administration correct and the skeptics wrong.

While the oil might be flowing, the country is a total mess.”

Slaughter’s account of the initial debate over the war includes several arguments: according to her, the advocates claimed Washington had a “strategic interest” in demonstrating to the under-thirty populations in the Middle East that we “live up to [our] values”; Washington needed to assert its belief that “effective leadership must come from the centre,” which is America; and the intervention emphasized U.S. relations with “social forces,” not just states, which was an overdue change.

I don’t remember those arguments featuring in the debate. The main skeptic argument was that even after the U.S.-led coalition regime-changed Qaddafi, stability, unity and liberalism were likely to be elusive. Stephen Walt surveyed the social-science literature on foreign-imposed regime change and judged,

“the probability that our intervention will yield a stable democracy is low, and … our decision to intervene has increased the likelihood of civil war. Heading off that possibility is likely to require a costly and extended international commitment, which is precisely what the people who launched this operation promised they would not do.”

Three years on, it’s worth a look at Libya and an effort to determine just how wrong the Libya skeptics were. So let’s start with the economy: According to Morgan Stanley, 2014 will see Libyan oil production above 25 percent of what it was under Qaddafi. Unemployment among youth …read more

Source: OP-EDS

Avatar of admin

by admin

Hillary Clinton, ISIL, and the Interventionist Bias

August 22, 2014 in Economics

By Christopher A. Preble

Christopher A. Preble

As Americans see images of New Hampshire-born journalist James Foley beheaded by members of the extremist militant group known as the Islamic State in Iraq and the Levant (ISIL), some commentators insist that the current chaos is a direct result of President Obama’s reluctance to intervene decisively in the multi-year conflicts in Iraq and Syria. Most notably, Obama’s own former Secretary of State, Hillary Clinton, in an interview with The Atlantic’s Jeffrey Goldberg, suggested that Obama’s failure to aid the Syrian rebels led to the rise of ISIL.

Clinton claims “that the failure to help build up a credible fighting force of the people who were the originators of the protests against Assad … left a big vacuum, which the jihadists have now filled.” Inherent in that statement is the belief that there was a cadre of relatively liberal-minded opponents of Bashar al-Assad’s regime inside of Syria, and that American support would have been the decisive factor in ensuring that they would triumph over both Assad and the ISIL extremists. By this logic, if the United States had chosen to arm the “correct” anti-Assad rebels in Syria, we would not now be bombing ISIL in Iraq.

Beltway insiders continue to call for more intervention, dismiss evidence that might undermine their case, and condemn those who advocate prudence and restraint.”

Experts aren’t so sure. George Washington University Professor Marc Lynch concludes, ”Had the plan to arm Syria’s rebels been adopted back in 2012, the most likely scenario is that the war would still be raging and look much as it does today, except that the United States would be far more intimately and deeply involved.”

And who, exactly, we were supposed to arm was never clear. When former U.S. Ambassador to Syria Robert Ford praised recent gains by Syrian moderates, he mentioned only one group by name: “the Army of Islam, led by an ambitious Islamist commander named Zahran Alloush.” But the University of Oklahoma’s Joshua Landis has shown that Alloush might not be so moderate after all.

The debate over what we should have done with the Syrian rebels back in 2012 also largely ignores the fact that the United States and its allies apparently did offer a good bit of training, resources, and weapons to purportedly moderate Syrian fighters who were vetted for their supposed democratic leanings.

But, somewhere along the line, the screening process …read more

Source: OP-EDS

Avatar of admin

by admin

America's Libertarian Moment?

August 22, 2014 in Economics

By Doug Bandow

Doug Bandow

The New York Times wonders if the libertarian moment has arrived. Unfortunately, there’ve been false starts before.

Ronald Reagan’s election seemed the harbinger of a new freedom wave. His rhetoric was great, but actual accomplishments lagged far behind.

So, too, with the 1994 Republican takeover of Congress. Admittedly, members of the GOP tend to toss around such phrases as individual liberty and limited government. However, their behavior in office looked little different from that of many Democrats.

Since then there’s been even less to celebrate in America, at least. George W. Bush was an avid proponent of “compassionate,” big government conservatism. Outlays rose faster than under his Democratic predecessor. No one did more to bail out business and enrich corporate America.

What’s to be gained by “taking the lead” on climate change?”

Barack Obama continued the tradition, promoting corporate welfare, pushing through a massive “stimulus” bill for the bank accounts of federal contractors, and seizing control of what remained private in the health care system. About the only good news is that incipient federal bankruptcy has discouraged Congress from adopting other massive new spending programs.

Over the last half century members of both parties took a welfare state that was of modest size despite the excesses of Franklin Delano Roosevelt’s New Deal and put it on a fiscally unsustainable basis as part of the misnamed “Great Society.” Economist Laurence Kotlikoff figures government’s total unfunded liability at around $220 trillion.

America’s annual GDP is just $17 trillion. How Uncle Sam will ever make good on all its promises is impossible to imagine.

The national government has done no better with international issues. Trillions went for misnamed “foreign aid” that subsidized collectivism and autocracy. Trade liberalization faces determined resistance, and often is blocked by countries which gain the greatest benefits of global commerce.

Even worse has been foreign policy. The ecstasy felt by most people after the collapse of the Berlin Wall — a quarter century ago — has been forgotten. The defense budget has turned into a new form of foreign aid for America’s populous and prosperous allies. The U.S. has been constantly at war, repeatedly proving that the Pentagon is no better at social engineering than is any other government agency.

Americans across the political spectrum agree that something is wrong, that the status quo is no good. But they disagree on the remedy.

However, the answer shouldn’t be that hard to discern. The definition …read more

Source: OP-EDS