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By Richard M. Ebeling

By: Richard M. Ebeling

Open, competitive markets have a resilient capacity to successfully coordinate the actions of, now, billions of people around the world. With an amazing adaptability to changing circumstances, the actions and reactions of multitudes of suppliers and demanders are brought into balance with each other. Yet, none of this requires government planning, regulation or directing control. But how does this all come about?

The key to this coordinating process is often assigned to the pricing system of the market economy. All the minimal information that anyone needs to bring his own actions as supplier or demander into balance with multitudes of others with whom he is interdependent is provided by the changing pattern of relative prices for finished consumer goods and the factors of production (labor, land, raw materials and capital).

Types and Uses of Knowledge in Society

Austrian economist Friedrich A. Hayek explained how this came about almost 75 years ago in his famous article, “The Use of Knowledge in Society,” first published in the American Economic Review in September 1945. He emphasized that matching the division of labor is an inescapable division of knowledge. Specialization necessarily means that each of us knows things that others do not.

Each of us possesses different types of knowledge in different complementary combinations. For instance, all of us, to one degree or another, have acquired what Hayek referred to as scientific or “textbook” knowledge. This is the type of knowledge we learned in school, and while we all learned many of the same things in our classroom experiences, especially in college or university we focused on and acquired far more specific and detailed knowledge about some subject in which we majored than many others who selected different majors at the same and different institutions of higher learning. The medical doctor knows many things that the criminal lawyer does not, just as the lawyer has a detailed knowledge of his area of the law that the biologist or the architect do not possess based on their classroom and assigned textbook learning, and so on.

Localized Knowledge of Time and Place

But Hayek pointed out that there is also another type of knowledge that we each possess in different ways, what he called “the localized knowledge of time and place.” This is the particular knowledge that is only learned, appreciated, and useable based on an individual working and interacting with others in a specific corner …read more

Source: MISES INSTITUTE

By Mateusz Machaj

By: Mateusz Machaj

Nowadays, rarely a week goes by free from news about the so-called gender pay gap. There is even now a “wage-gap day” on November 10. This is the day when women allegedly start to work for free for the rest of the year. The remaining 51 days are 14% of the year — a figure corresponding to the wage gap between women and men.

One can hardly find more mindless approach to this issue, however, as the idea behind the “working for free” narrative is an affront to any serious study of the of the wage-gap issue.

It is usually asserted that the gap is a product of discrimination and sexism. But any scientific approach to the issue requires that if we're going to make such an assertion, but we must take into account other variables that affect wages, such as the self-sorting by employees, total work experience (including working time), and education. Once we correct for such variables the adjusted wage gap is generated, which is significantly smaller. It is closer to the 2-5% range, depending on the study. Without such adjustments one is obviously comparing apples and oranges. We could as well say that a truck driver earning 12-times less than a banker is working for free since February, almost for the whole year.

I do not want to deal here, however, with the obvious distinction between the statistical wage gap and the adjusted wage gap — even though the popular press constantly and passionately refuses to learn anything from the existing research. I would like to focus here on what is left after the adjustment: that small, but still positive wage gap of 2-5%.

Let us pause for a while and analyze how the adjustment is made. There are various widely used statistical tools to do it, but their general methodological core is the same. We classify workers according to some objective and easily recognized features such as education, working time, sector and so forth. Furthermore, by using econometric analysis, we try to see the statistical connection of each change (increase or decrease) of a particular objective variable resulting in changes of the wage level. After the filtering is done we can recognize how much education, working time, and experience can contribute to higher income. Yet that does not fully bring the wage gap difference to zero.

What is a proper approach …read more

Source: MISES INSTITUTE

By Colin Grabow

Colin Grabow

Doing less with more is apparently the new motto in Albany. At
least that’s the logical conclusion, based on the recent decision
by the Legislature to pass, and Gov. Andrew Cuomo to sign,
legislation mandating the use American-made structural iron and
steel for all surface road and bridge projects in the state.

Forbidding the use of cheaper foreign alternatives, the new law
is sure to raise the cost of needed infrastructure projects. In
turn, the state will either be forced to let the state’s roads and
bridges further degrade, make cuts from elsewhere in the budget to
accommodate the spending increase, or raise taxes on New Yorkers.
Even worse, the law takes effect amid a rising budget deficit and a
report card from the American Society of Civil Engineers, which
hands the state a grade of D+ for its bridges and D- for its
roads.

The case against Buy American laws is so straightforward that
even a politician should be able to understand it. Simply put,
every extra dollar spent on the purchase of an American-made
product instead of a cheaper foreign-made alternative is a dollar
wasted. The new Tappan Zee Bridge, for example, required 110,000
tons of steel. Every $10 extra per ton spent on steel represents a
reduction in state coffers of more than $1 million for no
discernible benefit. Politicians don’t shop this way with their own
dollars, so why does cost-effectiveness cease when tax dollars are
on the line?

Sold as a tonic to
promote economic strength, New York’s new Buy American law is
instead sure to sap the state’s vitality through a witch’s brew of
higher taxes, worsened infrastructure, and increased budget
strain.

Advocates for such provisions rarely acknowledge these increased
costs and instead emphasize an alleged need to support
steel-producing jobs in the United States. In the words of Senate
Majority Leader John J. Flanagan, they argue the law will “protect
workers right here in our own backyard.” But even this makes little
sense. Again, the Tappan Zee is a useful example. Subject to its
own Buy American requirements, steel for the $4 billion project
wasn’t produced in New York but rather in Indiana and Pennsylvania.
Sen. Flanagan’s house on Long Island appears to have quite the
backyard.

It is true that steelworkers in those states will eventually use
their dollars to purchase products made in New York and other parts
of the United States, but this is no less the case with dollars
sent overseas. China, which produced steel used on the Verrazano
Bridge and LaGuardia Airport renovations, purchased $7.4 billion
worth of goods and services from New York last year. If …read more

Source: OP-EDS

By Daniel Brookman

By: Daniel Brookman

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
—The 4th Amendment to the US Constitution

Continuing Resolution Bill H.R. 1370 was signed into law by President Trump Friday December 22^nd allowing the President to symbolically sign the Tax Cuts and Jobs Act in time for Christmas. Attached to the bill, in addition to the usual wasteful spending, is the extension of the controversial FISA Section 702 Amendment that allows the government to spy on Americans without a probable cause warrant. Fortunately thanks to a handful of bipartisan Senators the reauthorization only lasts until January 19^th 2018. Senator Rand Paul (R-KY) threatened to filibuster any bill that included a long-term extension of the FISA amendment.

Undoubtedly we will see the FISA Amendment debated in Congress after the New Year, and it will be important battle in an effort to restore Americans’ protections from warrantless searches and seizures guaranteed by the 4^th Amendment. Overreaching intelligence community zealots and their allies in the legislature have been using national security as justification for a less than constitutional standard for collecting and using Americans private data.

Specifically, Section 702 currently allows the FBI and other federal agencies to use bulk data collected during the surveillance of foreign targets to be used in the prosecution of domestic cases. It acts as a backdoor to allow carte blanche spying on U.S. citizens bypassing the requirement for specific warrants issued upon probable cause. Senator Paul has been fighting for better protections for Americans from these unconstitutional actions and introduced the bipartisan USA Rights Act with Senator Ron Wyden (D-OR) earlier this year aimed at doing just that. The bill didn’t make it out of the powerful Senate Intelligence Committee.

The blanket warrants being used are essentially no different than the Writs of Assistance the British Crown imposed on colonial merchants leading up to the Revolutionary War. These Writs were general warrants that allowed officials to search and seize private property based upon any suspected premise. James Otis, a prominent mid-18^th century lawyer, appointed to the prestigious post of Advocate General of the Admiralty Court, resigned his post to represent the colonial …read more

Source: MISES INSTITUTE