What if a profound economic downturn occurred and the federal government basically ignored it? Couldn't happen, right? In his latest book, The Forgotten Depression, James Grant details for us the depression of 1921 and how it was permitted to cure itself. We discuss in this podcast how the Wilson* and Harding administrations let prices and wages fall, balanced the budget, and raised interest rates through the Federal Reserve. The result was a painful and, more importantly, quick depression that righted itself by late 1921, setting the stage for the economic growth of the 1920s. The comparisons are easy and telling. The…
Archives for December 2014
Hillary Clinton has received substantial criticism because of the large fees she has gotten to speak on college campuses. But the universities are also worthy of criticism. What possible justification is there for universities to pay hundreds of thousands of dollars to any politician for a speech? Universities aim to advance knowledge; politicians aim to advance themselves. Universities should value truth. Politicians are known for spin.
There is nothing wrong with welcoming politicians to campus. Students must use what they learn at college to critique the world, and politics is a worthy subject for interrogation. But the question remains why pay politicians to do it, when other aspects of college life in need of funds, such as instruction, facilities, and financial aid, are closer to the core mission of the university.
Such payments reveal two troubling aspects of the modern university.
This past Monday the Supreme Court heard oral argument in (yet) another important AdLaw case, Perez v. Mortgage Bankers Association. At issue: the D.C. Circuit’s “Paralyzed Veterans doctrine,” a set of cases holding that under some circumstances, agencies seeking to change their interpretation of a regulation or law must go through notice-and-comment rulemaking even when the original interpretation was adopted informally.
In The Once and Future King: The Rise of Crown Government in America, I argued that the United States was drifting towards the one-man rule of an all-powerful President. It’s not something people, especially American conservatives, wanted to hear, but then I had a secret ally in Barack Obama. He’s the gift that would never stop giving—but for term limits.
Via David Henderson, I came upon this essay by John Edward Terrell in the New York Times criticizing libertarians and Tea Party types for favoring individualism. What a morass of confusion!
To begin with, Terrell conflates (1) the appropriateness of respecting individual rights, (2) the moral question, how we should act, and (3) the psychological question, how we are likely to act. He seems to believe that libertarians believe that we should have absolute individual rights, that it is moral to be selfish, and that we are likely to be so.
These are old mistakes, but it is sad how often libertarianism is rejected for these mistaken reasons.
1. First, it is true that libertarians believe that people should have individual rights, but it is not because our actions have no effect on other people. Libertarians recognize that we are interconnected and argue that our mode of interaction should not be through coercion but through voluntary associations. Social interactions work better through voluntary associations.
Goods and services are better provided through a competitive market than through monopoly government provision. Similarly, in a free society, as de Tocqueville saw, people form voluntary associations to serve community ends and these associations generally work better than government does through coercion.
In the past few years, popular books about economics, such as Freakonomics and The Undercover Economist, have become surprise best-sellers, wowing readers by showing how economic reasoning can be applied to everyday topics like real estate commissions, sumo wrestling, and even street gangs. Yet a book had yet to be written applying economic logic to Americans’ use of credit. Now, four economists set out to change this, and readers may be surprised to learn that when it comes to credit, most of what they know “ain’t so.”
I live in Chicago, which is a badly governed city in the worst governed state in the nation. And it has just made another serious mistake, raising its minimum wage to $13.00 by 2019 and to $10 by next year. Ultimately, the new minimum will represent an increase of more than 50 percent over the present one.
Many of the criticisms of minimum wage are well known. For instance, it tends to increase unemployment and this effect falls most harshly on the least skilled. Moreover, earned income tax credits are a superior, targeted way of helping the poor. But there are some very unfortunate aspects of this decision that are peculiar to Chicago and the time in which we live.
First, Chicago is part of a much larger metropolitan area.
In 1948, when confronted with a cache of damning documents in his handwriting and typescript collected a decade before by his then-comrade Whittaker Chambers, Alger Hiss, a lawyer, State Department official, and a Soviet spy code-named ALES, responded in the following fashion: “I immediately directed that the papers be turned over to the Department of Justice, as it was evident that they were copies and summaries of State Department documents which warranted inquiry.”
Contrast this with Chambers’ response when the documents’ authenticity was challenged. His government benefactor, Rep. Richard Nixon (R-Cal.), submitted the microfilmed portions of the cache to a photographic expert to determine their date. Chambers’ claim that they were from the time, in the 1930s, when he and Hiss worked for Soviet military intelligence, was rejected by said expert, who determined that the kind of film used was a new product. In other words this particular evidence, at least, had to have been faked. When a worried Nixon threw that at Chambers, his response was that “God must be against me.” (It turned to be a temporary setback, for the expert had been wrong that such film wasn’t being manufactured in the 1930s.)
Civil law in the United States, originally intended to right wrongs and discourage people from committing them in the first place, has long since become an extortion racket that makes the methods of Al Capone seem amateurish by comparison.
The shale oil and gas revolution has been a principal cause of the recent drop in oil prices. This decline provides the equivalent of a tax cut for consumers. It is to be applauded for that reason alone. But even more importantly, it boosts our liberty and security as well by weakening the power of Russia, Venezuela, Iran and other nations heavily dependent on resource extraction.
It is not widely appreciated, but the rise of shale energy is in large measure yet another benefit of the computational revolution. Supercomputers find the right formations in which to drill, and smart drilling guided by computation makes the extraction of oil much cheaper. With advances in computation, these costs will continue to fall.