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Murray Rothbard on Lao-Tzu as the “First Libertarian”

November 17, 2014 in Economics

By Jeff Deist

Lao-Tzu

Jeff Thomas at the International Man has an interesting take on Murray Rothbard’s admiration for Lao-Tzu. The founder of Taoism had little good to say about the philosopher-bureaucrats of his time.

Those in power are meddlesome …

The greater the restrictions and prohibitions,
The more people are impoverished.
The more advanced the weapons of the state,
The darker the nation …

Thus the virtuous attend to contracts
while those without virtue collect taxes …

Act before things exist

Manage them before there’s disorder

…read more

Source: MISES INSTITUTE

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Ukrainian Crisis Must Not Become a Frozen Conflict

November 17, 2014 in Economics

By Emma Ashford

Emma Ashford

The Ukrainian crisis appears increasingly intractable. Despite successful Ukrainian national elections in late October, illegal separatist elections held a few days later have undermined the fragile peace plan, leaving the region effectively in limbo. As a result, many argue that eastern Ukraine is on its way to becoming a frozen conflict, joining the ranks of other post-Soviet crises in which no political solution could be achieved. But letting the Ukrainian violence fester is a terrible solution, increasing the long-term risk of confrontation between Russia and the West. It may be tempting for leaders to simply denounce Russian President Vladimir Putin at this weekend’s G-20 summit. But if they don’t want the Ukraine crisis to linger for years to come, they must instead look for a political solution that formally ends hostilities.

Despite the nominal cease-fire, fighting near Donetsk has intensified in the last week, with increased shelling by both sides. More worrying, sources in Ukraine and the Organization for Security and Cooperation in Europe report that large convoys of heavy weapons and armor, including tanks, have been seen crossing into eastern Ukraine from Russia. There is concern that the rebels intend to make a major push in the coming days, perhaps to seize the port city of Mariupol. The White House has expressed grave concern about the situation, and NATO Commander Gen. Phillip Breedlove told journalists that he considers the situation a cease-fire “in name only.”

This buildup might seem at odds with recent descriptions of the conflict as entering a frozen phase. But frozen conflicts often include periods of high tension and hostilities. The uncertainty created by the lack of any peace treaty often increases tensions, making future hostilities more likely. Other post-Soviet frozen conflicts have experienced similar swings. Strife in the Georgian separatist enclaves of South Ossetia, Abkhazia and Adjara, for example, were frozen for a decade or more but saw frequent skirmishes, major insurgencies (in 1998 and 2004) and, ultimately, the 2008 Russia-Georgia war. The ambiguity created when a conflict freezes means that key differences are never resolved, creating the ever-present threat of renewed hostilities.

US, EU and Russian leaders must find political resolution soon or face ever-present threat of renewed hostilities.”

Allowing the Ukraine crisis to solidify into a frozen conflict, then, effectively guarantees future clashes in the region. It leaves the government in Kiev with a long-term insurgency within its borders, <a target=_blank href="http://news.yahoo.com/ukraines-currency-plunges-ceasefire-fears-grow-184907319.html" …read more

Source: OP-EDS

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Who's Afraid of a Little Deflation?

November 17, 2014 in Economics

By John H. Cochrane

John H. Cochrane

With European inflation declining to 0.3%, and U.S. inflation slowing, a specter now haunts the Western world. Deflation, the Economist recently proclaimed, is a “pernicious threat” and “the world’s biggest economic problem.” Christine Lagarde , managing director of the International Monetary Fund, called deflation an “ogre” that could “prove disastrous for the recovery.”

True, a sudden, large and sharp collapse in prices, such as occurred in the early 1920s and 1930s, would be a problem: Debtors might fail, some prices and wages might not adjust quickly enough. But these deflations resulted directly from financial panics, when central banks couldn’t or didn’t accommodate a sudden demand for money.

The worry today is a slow slide toward falling prices, maybe 1% to 2% annually, with perpetually near-zero short-term interest rates. This scenario would unfold alongside positive, if sluggish, growth, ample money and low credit spreads, with financial panic long passed. And slight deflation has advantages. Milton Friedman long ago recognized slight deflation as the “optimal” monetary policy, since people and businesses can hold lots of cash without worrying about it losing value. So why do people think deflation, by itself, is a big problem?

1) Sticky wages. A common story is that employers are loath to cut wages, so deflation can make labor artificially expensive. With product prices falling and wages too high, employers will cut back or close down.

Sticky wages would be a problem for a sharp 20% deflation. But not for steady 2% deflation. A typical worker’s earnings rise around 2% a year as he or she gains experience, and another 1% — hopefully more — from aggregate productivity growth. So there could be 3% deflation before a typical worker would have to take a wage cut. And the typical worker also changes jobs, and wages, every 4½ years. Moreover, “typical” is the middle of a highly volatile distribution of wage changes among a churning job market. Ultimately very few additional workers would have to take nominal wage cuts to accommodate 2% deflation.

Curiously, if sticky wages are the central problem, why do we not hear any loud cries to unstick wages: lower minimum wages, less unionization, less judicial meddling in wages such as comparable worth and disparate-impact discrimination suits, fewer occupational licenses and so forth?

: Bottom line? Relax.”

2) Monetary policy headroom. The Federal Reserve wants a 2% inflation rate. That’s because with “normal” 4% interest rates, …read more

Source: OP-EDS

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Sen.Rand Paul Appears on Real Time with Bill Maher- Nov.14, 2014

November 17, 2014 in Politics & Elections

…read more

Source: RAND PAUL

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The Stupidity of 'Experts'

November 17, 2014 in Economics

By Richard W. Rahn

Richard W. Rahn

The only surprising thing about Obamacare architect Jonathan Gruber’s revelations that the legislation was based on a series of lies and voter stupidity was that Mr. Gruber was so stupid to think no one would see the videos of him saying so.

The good news is that, perhaps, many more Americans will wake up to the fact that Obamacare is not the only hoax they have been subjected to, and will be much more skeptical about policy experts’ snake oil. Most of these schemes increase the power and money flowing to the political class and their “experts,” while robbing the pocketbooks and liberties of the people.

The great economist F.A. Hayek (1899-1992) argued there was a limit to what any one person or even groups of people could know, which was one reason socialist planning always failed. His 1974 Nobel Prize lecture ended with the following sentence: “The recognition of the insuperable limits to his knowledge ought indeed to teach the student of society a lesson of humility, which should guard him against becoming an accomplice in men’s fatal striving to control society — a striving which makes him not only a tyrant over his fellows, but which may well make him the destroyer of a civilization which no brain has designed, but which has grown from the free efforts of millions of individuals.”

Big-government intellectuals seldom own up when their policies fail.”

Washington, Paris, London, Moscow, Beijing and Tokyo are rife with “experts” who claim they are smarter than markets and know what is best for others. The whole socialist and big-government ideal is predicated on the notion that the intellectuals can bring us nirvana — but something always goes wrong. Yet, blissfully, without self-doubt, they go from failure to failure to failure, as others pay the price.

The “smart” folks around the world, consisting of many members of the political class, such as President Obama and many scientists who live off the taxpayer-funded grants, tell us we must spend hundreds of billions, if not trillions, of dollars to stop global warming. The villain they have identified is carbon dioxide. Their solutions are to subsidize things such as windmills and solar cells, even though their own models indicate they will have almost no measurable effect on the Earth’s temperature 100 years from now. However, these subsidies do create campaign contributions and other financial benefits for their advocates. When it is pointed out …read more

Source: OP-EDS

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Why Government Fails and Why Ideas Matter

November 17, 2014 in Economics

Far too many people who call for government intervention assume that politicians and other government agents are superhuman — that when they are elected or appointed to political office, they are miraculously transformed into beings consistently more altruistic, knowledgeable, and wise than are business executives, consumers, and other people who operate only in the private sector. In the new Cato Policy Report, Cato adjunct Donald J. Boudreaux explains how knowledge of Public Choice destroys the romantic myth that government is some sort of miracle worker.

…read more

Source: CATO HEADLINES