You are browsing the archive for 2014 September 26.

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PM Modi's US Visit: India Has to Look Like a Superpower to Get US Investors interested Again

September 26, 2014 in Economics

By Swaminathan S. Anklesaria Aiyar

Swaminathan S. Anklesaria Aiyar

Washington DC: Prime Minister Narendra Modi’s US visit is a damage repair job, not a triumphal clinching of a strategic relationship. Indo-US relations resemble a broken-down car covered with dust. Modi must do more than wipe off the dust. He must convert India into an economic powerhouse that is globally relevant again, and has strategic value for others.

In the 2000s, India’s GDP grew rapidly, making it a potential superpower and the only plausible strategic counter to China in Asia. India was also an attractive destination for US business, which became the strongest lobby India ever had in Washington DC. This facilitated the Bush-Singh nuclear deal and Obama’s backing for a UN Security Council seat.

Prime Minister Narendra Modi’s US visit is a damage repair job, not a triumphal clinching of a strategic relationship.”

But after 2010 India’s economy plunged downhill. In dollar terms, it actually shrank. It went from one-third China’s size to one-fifth. Policies turned populist, obstructionist and investor-unfriendly, so Indian investment collapsed along with foreign investment.

Last summer, this “potential superpower” became instead one of the “Fragile Five” countries on the brink of economic disaster, as the rupee crashed from Rs 55 to Rs 68 to the dollar before recovering to Rs 62. US business lost patience with growing Indian red tape and anti-market attitudes.

It became a lobby against India instead of for India. US business now complains bitterly about India’s restrictive patent regime, growing protectionism, infrastructure collapse, retrospective tax changes (as in the Vodafone case), innumerable tax disputes on transfer pricing, India’s reneging on free pricing for gas discoveries, huge increase in price controls in pharma, obstruction of a WTO deal and paralysis in clearing new projects.

Tackling these issues requires radical changes at home, not handshakes abroad or pleas to foreigners to make India a manufacturing hub. When Indians are not rushing to invest in India, will Americans do? Putting a satellite into Mars’ orbit is a great technical display, but not a substitute for commercial success. The liability clause in India’s nuclear law has at one stroke neutered the Bush-Singh nuclear deal: no firm deal has been signed for a single new reactor.

If Modi pledges to change just this, it will be a breakthrough, but that implies a huge attitude change. Modi’s raising of FDI limits in defence, insurance and railway infrastructure have not enthused US business, which will not rest content with a 49% stake and …read more

Source: OP-EDS

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Academics and Social Media

September 26, 2014 in Economics

By Peter G. Klein

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At this week’s Strategic Management Conference in Madrid I participated in an interesting session on Media Innovations, along with Will Mitchell and Wiley’s Caroline McCarley. My remarks focused on academics and their use of social media. How (if at all) can professors use blogs, videos, wikis, and other social media products to disseminate their research, to improve their teaching, and even to discover new ideas? Are social media and “serious” activities like research and class preparation substitutes or complements? Should untenured faculty avoid such distractions?

I began my remarks — where else? — with Kim Kardashian. Biologist Neil Hall made a bit of a splash a few months back by introducing the Kardashian Index, basically the ratio of an academic researcher’s Twitter followers to citations in peer-reviewed journals. (For a rough approximation, just divide Twitter followers by Google Scholar cites.) Someone with a very high K-index, the story goes, has a large popular following, but hasn’t made any important scientific contributions — in other words, like Kim, famous for being famous.

Science published a rejoinder suggesting that the K-index gets it wrong by implying, incorrectly, that popular and scholarly influence are inversely related. Indeed, among the top 20 natural scientists, by Twitter followers, are some scientific lightweights like Neil deGrasse Tyson (2.4 million Twitter followers and 151 citations), but also serious thinkers like Tim Berners-Lee (179,000 followers and 51,204 cites) and Steven Pinker (142,000 and 49,933). I haven’t run the numbers for economists and management scholars but I think you’ll find the same general pattern. E.g., among the biggies on the LDRLB Top Professors on Twitter list you find a mix of practitioner-oriented writers with modest academic influence (Bill George, Richard Florida, Stew Friedman, Gary Hamel) and scholars with huge citation counts (Mike Porter, Clay Christensen, Adam Grant).

I went on to emphasize (as usual) that, for the most part, these issues are nothing new. Scholars and thinkers throughout history have used whatever media are available to disseminate their ideas to wider audiences. In the 17th-19th centuries there were pamphlets, handbills, newspapers, and lecture halls; in the 20th century radio, magazines, TV, and other outlets. Classical economists like John Stuart Mill published anti-slavery tracts; the Verein für Socialpolitik took positions on important social issues of the day; the American Economic Association was founded to combat lassiez-faire; Mises and Hayek advised governments and wrote popular books; C. S. Lewis gave his famous wartime radio lectures; Paul Samuelson and Milton Friedman dueled in the pages of Newsweek, and Friedman took …read more

Source: MISES INSTITUTE

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Sen. Paul Speaks at Values Voter Summit 2014- September 26, 2014

September 26, 2014 in Politics & Elections

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Source: RAND PAUL

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Damon Linker’s “terrible, horrible, no good, very bad idea”

September 26, 2014 in Economics

By William Anderson

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Damon Linker, the writer who believes that the State is the Measure of All Things Great, has declared that the concept of what F.A. Hayek called the “spontaneous order,” is a “terrible, horrible, no good, very bad idea.” This is how Linker describes the concept:

Simply stated, the idea holds that when groups of individuals are left alone, without government oversight or regulation, they will spontaneously form a social and economic order that is superior in organization, efficiency, and the conveyance of information than an order arranged from the top down through centralized planning.

This view, declares Linker, is ” utter fiction. A fairy tale.”

So, what is the proof that Hayek and others were wrong?

President Obama got a lot of flack during his 2012 campaign for re-election for saying that wealthy business owners “didn’t build that” all by themselves, but his point was indisputable. The president mentioned the internet, roads and bridges, firefighting, and other public works that make it possible for the market economy to function and thrive. He could have said far more. How about the culture of general law-abidingness that we call the rule of law? The Federal Reserve’s regulation of the money supply? An independent judiciary for the settlement of civil disputes? Law enforcement at local, state, and federal levels that fights violent crime, fraud, corruption, monopolistic business practices, and a host of other behaviors that would otherwise scuttle the working of markets? And on and on and on.

Please understand that Linker does not elaborate on any of these points, just that he accepts his statements as pure and unvarnished truth and that they are self-evident. The only problem is that none of what he says is self-evident, and there is plenty of proof on the other side to show that these things he cites as being the true creator of social order are not what they say they are.

North Korea has all of the things Linker claims are the real source of prosperity, yet the country is dirt poor. For that matter, we can look at Venezuela, where the social order is falling apart. On the home front, I bet the citizens of Ferguson, Missouri, do not see the police as holding a society together, and anyone who has been involved in the American court systems on local and federal levels can attest to a corrupt and unjust system.

North Korea: A …read more

Source: MISES INSTITUTE

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Thornton: The ‘Irrational Policy’ That Is Cannabis Prohibition

September 26, 2014 in Economics

By Ryan McMaken

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Originally published at LiveFreeBlog.com:
The Case Against Repealing Marijuana Prohibition?

by Mark Thornton

The recent victories in favor of legalizing recreational marijuana consumption in Colorado and the state of Washington have given hope for the eventual repeal of national marijuana prohibition. Many states have reformed their marijuana laws, including provisions for legal medical marijuana consumption in more than 20 states.

Despite these positive developments, marijuana remains a Class 1 drug along with heroin and cocaine. There remains widespread misunderstand concerning marijuana consumption, its dangers, and the implications of legalizing marijuana. This lack of understanding is exemplified by a pamphlet published by the prestigious Heritage Foundation, “Legalizing Marijuana: Why Citizens Should Just Say No,” by Charles Stimson (September 13, 2010).

Here are the main “issues” raised by legalizers that the pamphlet tries to debunk:

“Marijuana is safe and non-addictive.” No one should argue that marijuana is completely safe as few things in life are perfectly safe. However, it is relatively safe compared to other recreational drugs. Most of the negative health consequences have been debunked. I examined several lists of “the most addictive drugs” and marijuana was either not on the list or was far down the list.

“Marijuana prohibition makes no more sense than alcohol prohibition did in the early 1900s.” There was no rational justification for marijuana prohibition in the first place, it was simply racially motivated propaganda. The medical community testified against the prohibition, not in support of it. At least supporters of alcohol prohibition could speak to genuine social problems and health concerns about alcohol. Therefore, marijuana prohibition actually makes even less sense than alcohol prohibition.

“The government’s efforts to combat illegal drugs have been a total failure.” Despite enormous fiscal and social costs, the war on drugs has done little to reduce access to drugs or to put a dent in the addiction rate. Meanwhile, crime, corruption, violence and crime associated with the War on Drugs, drug overdoses, and emergency room visits have all skyrocketed.

“The money spent on government efforts to combat the illegal drug trade can be better spent on substance abuse and treatment for the allegedly few marijuana users who abuse the drug.” The problems associated with drug use and addiction can never be solved by law enforcement. These are medical, social, and educational problems and have to be addressed in that manner.

“Tax revenue collected from marijuana sales would substantially outweigh the social …read more

Source: MISES INSTITUTE

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When Will the Bubble Burst?

September 26, 2014 in Economics

By Joseph Salerno

Woolworth Building

As I exit Pace University in Lower Manhattan where I teach, I can look across City Hall Park to the west side of Broadway to see the terra-cotta Woolworth Building, an early skyscraper  built in 1913  If I gaze upward, there atop the building I can view the iconic green tower  containing the nine-story penthouse that is now on the market for $110 million.  But that is not the most expensive piece of residential  real estate currently on the booming Manhattan market.  That honor goes to the triplex penthouse condo at 520 Park Avenue on the toney Upper East Side, which is still under construction and lists for $130 million.  The 30 one- and two-floor condos in the same tower list for between $16.2 and $67 million.  And it is not just the very high end of the market that is a-bubbling.  It was reported that in the second quarter, the average amount of time that a property remained on the market was 96 days, down 46% from a year ago, despite the fact that the number of properties on the market was up 18% year over year.  The buyers were largely foreign, especially Chinese.

More evidence that the bubble is expanding can be found in the global art market.  In the year ending July 2014, sales of contemporary art at public auctions reached  $2.046 billion, a 40% increase over the previous year.  China surpassed the U.S. to take in 40% of the total sales proceeds.

Not surprisingly, the number of financial commentators issuing dire warnings of an imminent  collapse of the real estate and stock market bubbles increases every day.  Unfortunately, most are unable to articulate a coherent case for the their forecasts because they are unacquainted with the Austrian theory of the business cycle. A notable exception is  Michael Pollaro, who  bases his forecast  of an increased risk of economic collapse on the sharp deceleration of the TMS monetary aggregate (formulated by  Murray Rothbard and myself).  Pollaro points out that the year-over-year rate of growth of TMS–or what he labels TMS2–was 7.9% in August, which is down  780 basis points or 50%  from its August 2011 high.  According to Pollaro:

The data support what the Austrians teach – monetary inflations create booms which result in deflationary busts once the rate of monetary [growth] turns down in a significant and sustained manner. The 1995 to 1999 monetary surge, then subsequent monetary deceleration gave us the Technology Boom-Bust.  …read more

Source: MISES INSTITUTE

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Regulate It First, Learn About It Never

September 26, 2014 in Economics

By Ryan McMaken

Conference Meeting

Mises Daily Friday by Gary Galles:

Politicians and regulators usually don’t know what they don’t know about everything from health care to your small business, but that sort of compound ignorance won’t stop them from regulating the minutiae of everyday life and commerce.

…read more

Source: MISES INSTITUTE

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The Global Warming Money Nexus Corrupts Real Climate Research

September 26, 2014 in Economics

By Patrick J. Michaels

Patrick J. Michaels

National Public Radio published a story last week on biomedical scientists “cutting corners” in pursuit of funding. It was about the search for a cure for that horrendous ailment, Amyotrophyic Lateral Sclerosis, also known as Lou Gehrig’s disease. Repeatedly, drugs that seemed to work in animal tests didn’t pan out when tried on humans.

NPR spoke with Story Landis, director of the National Institute of Neurological Disorders and Stroke, who said that “part of the explanation relates to a growing issue in biomedical science: the mad scramble for scarce research dollars.” So, she said, “scientists are tempted to oversell weak results.”

She went on: “Getting a grant requires that you have an exciting story to tell, that you have preliminary data, and you have published. In the rush, to be perfectly honest, to get a wonderful story out on the street in a journal, and preferably with some publicity to match, scientists can cut corners.”

There’s strong evidence that the prevalence of bad science and ‘cut corners’ is increasing.”

What’s happening is that scientists aren’t replicating the work of others. That’s viewed as a waste of time because it’s not flashy enough to attract money. And given that oodles of funding are required to publish the reams of papers required to get promotion and tenure at a tier-one research university, doing that kind of work is likely to endanger your career.

“Scarce research dollars” aren’t the problem. The number of practitioners of a given science is directly proportional to how much money floods the field. There’s no scientist struggling for promotion in high-end academia who thinks he or she is adequately funded. Dollars, by their very nature, are scarce. That’s why money has value.

The problem, instead, is the “American model” for professional advancement, which can be stated simply: “get funded, get published or get out.”

Take my specialty, climate change. Back when I started at this, in 1976, no one wanted to be a climatologist, in no small part because there was very little funding to go around. But as global warming became a political cause, the dollar flow increased from a few million a year to a current federal outlay of $2.3 billion.

And so everyone doing anything that could be vaguely related to climate change got into the act. On came the ecologists, the plant physiologists and even the psychologists.

You can see the results in the “national assessments” …read more

Source: OP-EDS