Economics

Why Austrian Economics Matters More Than Ever

Here's a talk recently delivered by Lew Rockwell, president of the Ludwig von Mises Institute. This organization remains the best place to learn about why our economy is in such trouble. The full speech can be read at Why Austrian Economics Matters More Than Ever. An excerpt: I report on this not so that we can say "We told you so," but rather to underscore the need to stick to principle, depart from the crowd, avoid the fashion, and adhere to the truth no matter what. This is what Mises taught us, and if he had done nothing more than…
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Pat Buchanan: Comrade Obama?

Pat Buchanan's recent column Comrade Obama? contains much I agree with, keeping me liking and admiring him, even through I disagree with a few of his positions. This column accurately describes the current political landscape, and it's not complimentary to Barack Obama, Democrats, or Republicans. A few excerpts: Indeed, how do Republicans who call Obama a socialist explain their support for Social Security, Medicare, Medicaid, food stamps, welfare and the Earned Income Tax Credit? ... Since August, the Bush-Paulson team has seized our biggest S&L, Washington Mutual, and largest insurance company, AIG. It has nationalized Fannie and Freddie, pumped scores…
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Some Articles Worth Reading

Making Social Security More Harmful. From the Foundation for Economic Education. "Consider first that ever since Social Security was enacted in 1935 Americans have been told that their 'contributions' are being deposited into their own account to pay for their retirement benefits. ... The other fraudulent claim made about Social Security (again, from the very beginning of the program) is that employees pay only half the cost, with employers paying the other half." Banking Without Regulation. Another fine article from FEE. Could banking be done without regulation? It has been done in the past. The Election Choice: Unions. "Obama's pro-union…
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The Myth that Laissez Faire Is Responsible for Our Present Crisis

Professor George Reisman contributes the excellent (and lengthy) article The Myth that Laissez Faire Is Responsible for Our Present Crisis. I've had the distinct honor of attending a number of Professor Reisman's lectures at the Ludwig von Mises Institute, and I'm slowly working my way through his monumental book Capitalism: A Treatise on Economics. Here's a few excerpts from this article: "Laissez-faire capitalism is a politico-economic system based on private ownership of the means of production and in which the powers of the state are limited to the protection of the individual's rights against the initiation of physical force." Then…
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Beyond Bailouts Is Recommended

I recommend BeyondBailouts.org as a place to learn about the current situation in our financial markets. From their site: BeyondBailouts.org is a joint venture of the National Taxpayers Union (NTU) and Competitive Enterprise Institute (CEI). The purpose of the website is to educate about government’s role in our current financial difficulties, suggest reforms that address those root causes, and provide a clearinghouse for the latest analysis of the financial crisis. But most of all, it’s an outlet for Americans to contact their Members of Congress and the Administration to express their frustration.
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Firms that made wrong decisions should fail

So says Anna Schwartz. She co-authored, with Milton Friedman, A Monetary History of the United States. She has insight into what's going on right now. Read the Wall Street Journal's Weekend interview Bernanke Is Fighting the Last War.
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Earmarks are (not) OK

In a Wichita Eagle letter, writer Prem N. Bajaj of Wichita makes the case that Earmarks are OK. But only by tortured reasoning, in my opinion. First, he states: "Earmarks finance local projects that the community is unable to support." I ask Mr. Bajaj this question: Where, if not from community, does money for earmarks come from? If you consider just two parties -- your local community and the federal government -- earmarks may seem like a great thing. Free money! Who doesn't want that? But communities across the country lobby for and get earmarks too, and they may be…
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Are We Angry Only Because We Were Caught?

In his column Welcome to 'Moral Hazard', Wall Street Journal editorial writer Daniel Henninger writes: For behind it all sat Fannie Mae and Freddie Mac, running mortgage liquidity into the nation's neighborhoods like an open fire hydrant. Several years ago, when the Journal's editorial board met with Fannie Mae's top executives and pressed the issue of financial risks, we were told by way of ending the conversation that Fannie was merely fulfilling the "mandate of Congress" to spread home ownership across the land. Congress, of course, is a temple to moral hazard. ... For all the wailing about the high…
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Our problem is the manager of our money

Judy Shelton makes this case in the Wall Street Journal editorial Loose Money And the Roots Of the Crisis: Think of it: Nothing is more vital to capitalism than capital, the financial seed corn dedicated to next year's crop. Yet we, believers in free markets, allow the price of capital, i.e., the interest rate on loanable funds, to be fixed by a central committee in accordance with government objectives. We might as well resurrect Gosplan, the old Soviet State Planning Committee, and ask them to draw up the next five-year plan. "There are numbers of us, myself included, who strongly…
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Dry-Cleaning Economics in One Lesson

The Foundation for Economic Education reports that an American clothes hanger company has succeeded in persuading the government to slap a tariff on its foreign competitors. Who wins? ...the tariff is expected to cost some $212,765 for each of the 564 jobs saved. ... The lesson is that the misguided attempt to save jobs for domestic hanger manufacturers comes at the expense of other domestic employment. Failure to base policy on Hazlitt’s wisdom has led to the substitution of political competition and bureaucratic fiat for the market process. Not only has M&B [the domestic hanger maker] enriched itself by using…
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