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Economics

November 10, 2014

"Not so foolish"

Steven Poole, Aeon: "We are more rational than those who nudge us."

And so there is less reason than many think to doubt humans’ ability to be reasonable. The dissenting critiques of the cognitive-bias literature argue that people are not, in fact, as individually irrational as the present cultural climate assumes. And proponents of debiasing argue that we can each become more rational with practice. But even if we each acted as irrationally as often as the most pessimistic picture implies, that would be no cause to flatten democratic deliberation into the weighted engineering of consumer choices, as nudge politics seeks to do. On the contrary, public reason is our best hope for survival. Even a reasoned argument to the effect that human rationality is fatally compromised is itself an exercise in rationality. Albeit rather a perverse, and – we might suppose – ultimately self-defeating one.

Bravo!

 

"Governments Need Inflation, Economies Don’t"

Peter Schiff speaks truth to power

Every year the levels of government debt as a percentage of GDP, for both emerging market and developed economies, continue to go higher and higher. As the ratios push out into uncharted territories, particularly in Europe’s southern tier, the ability to “inflate away” debt through monetization remains the only means available to postpone default. Evans-Pritchard quotes a Bank of America analyst as saying that even “low inflation” (not to mention actual deflation) is the “biggest threat to the dynamics of public debt.” IMF Managing Director Christine Lagarde ramped up the rhetoric further when she recently told the Washington Press Club that “deflation is the ogre that must be fought decisively.” In other words, governments need inflation to remain viable. It’s the drug they just can’t do without.

November 06, 2014

"Are Conservatives Being Seduced By Value-Added Tax?"

Excellent piece by Cato's Daniel Mitchell. I agree completely: support for a VAT is a conservative version of a classic Liberal mistake. It assumes practice will match the theory. It probably won't.

Having a vision of a free society doesn’t mean libertarians are incapable of common-sense political calculations.

For example, the long-run goal is to dramatically shrink the size and scope of the federal government, both because that’s how the Founding Fathers wantedour system to operate and because our economy will grow much faster if labor and capital are allocated by economic forces rather than political calculations. But in the short run, I’m advocating for incremental progress in the form of modest spending restraint.

Why? Because that’s the best that we can hope for at the moment.

Another example of common-sense libertarianism is my approach to tax reform. One of the reasons I prefer the flat tax over the national sales tax is that I don’t trust that politicians will get rid of the income tax if they decide to adopt the Fair Tax. And if the politicians suddenly have two big sources of tax revenue, you better believe they’ll want to increase the burden of government spending.

One reason why some poor countries are poor

Poor--or soon to be poor--countries build hideously expensive crap like this: "Turkey's New Presidential Palace Is Absurd".

(Yeah, yeah, presidential palaces are endogenous. So sue me.)

 

November 05, 2014

"Shock! Farm Bill Boondoggle Already Bigger than Politicians, Media Promised"

"You’ll never believe it, you guys.  The 2014 Farm Bill could – and I know, this is gonna sound crazy – impose more harm on US taxpayers and consumers than our political and media elite promised us just a few months ago."

November 04, 2014

"Reinflating the housing bubble"

That famous statement by George Santayana comes to mind.

Maybe the Obama Democrats should start running billboards across the country announcing: “Uncle Sam is back in the subprime lending game.”

See also "Underwriting the Next Housing Crisis" and "Having Learned Nothing From '08, the Feds Double Down On Housing".

November 03, 2014

Go ahead, Liberals, raise the minimum wage . . .

. . . you'll get a whole lot more of this: "Service Robots Will Now Assist Customers at Lowe’s Store".

Link courtesy of Tom B.

October 30, 2014

"Yes, the Deficit Is Smaller. But That Wasn’t the Main Problem."

Absolutely. Maya MacGuineas, president of the Committee for a Responsible Federal Budget:

What was needed then and is still needed now is a plan–not for short-term austerity but to address our medium- and long-term debt situation. Policies need to be phased in gradually and designed to support the country’s economic recovery. Unfortunately, we got the opposite: spending reductions that focused on the short term and cuts to discretionary spending instead of tax reforms and entitlement reforms to generate permanent and growing savings. 

See also Erskine Bowles:

I wish I could believe the recent decline in the deficit is sustainable. The temporary factors related to the recession — which caused the deficit to increase dramatically — are now receding, but the structural problems with our budget remain.

October 29, 2014

"Americans have no idea how the government spends money"

Americans, generally, apparently know the same amount about federal expenditures as my students did. Which is to say: not much.

See also Ilya Somin, "The persistence of public ignorance about federal spending".

October 28, 2014

"The Real Reason the Poor Go Without Bank Accounts"

Guess what? The "unbanked" are a heck of a lot more rational than Liberals assume.

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