In a letter to [University of Chicago] President Robert Zimmer, 101 professors—about 8 percent of the university’s full-time faculty—said they feared that having a center named after [Milton Friedman,] the conservative, free-market economist could “reinforce among the public a perception that the university’s faculty lacks intellectual and ideological diversity.”
Economics & Finance
Paying For Children Revisited
I made one of my long comments over on Reason’s Hit&Run so I thought I would turn into post here.
The economics of child raising is the ultimate driver of the welfare state. That makes it a matter of key importance to libertarians. If libertarians cannot create a free market system which provides for the material resources needed to turn a zygote into an engineer, then we will never see the end of the massively invasive state.
I Spoke Too Soon
A while ago I disparaged the Indian government’s backwardness (as I saw it) in considering a ban on futures trading. But now, not a few American pols, journalists and bloggers are sounding like the Indian finance minister, making similarly foolish suggestions in favor of restricting oil speculation.
Everybody always wants to punish speculators. But speculators, by following their self-interest, provide the rest of us with market liquidity, price information and generally lower costs of doing business.
Also, if you believe in freedom, free markets are good in and of themselves. Restricting speculation when prices are unusually high or low is like restricting unpopular speech: there’s generally an expedient argument for it, and it’s generally a bad idea because the long-term harm it does far outweighs any short-term benefits.
Quote of the Day
Americans have had it so good, for so long, that they seem to have forgotten what government’s heavy hand does to living standards and economic growth. But the same technological innovation that is causing all this dislocation and anxiety has also created an information network that is as near to real-time as the world has ever experienced.
For example, President Bush put steel tariffs in place in March 2002. Less than two years later, in December 2003, he rescinded them. This is something most politicians don’t do. But because the tariffs caused such a sharp rise in the price of steel, small and mid-size businesses complained loudly. The unintended consequences became visible to most Americans very quickly.
Decades ago the feedback mechanism was slow. The unintended consequences of the New Deal took too long to show up in the economy. As a result, by the time the pain was publicized, the connection to misguided government policy could not be made. Today, in the midst of Internet Time, this is no longer a problem. So, despite protestations from staff at the White House, most people understand that food riots in foreign lands and higher prices at U.S. grocery stores are linked to ethanol subsidies in the U.S., which have sent shock waves through the global system.
This is the good news. Policy mistakes will be ferreted out very quickly. As a result, any politician who attempts to change things will be blamed for the unintended consequences right away.
Both Mr. McCain and Mr. Obama view the world from a legislative perspective. Like the populists before them, they seem to believe that government can fix problems in the economy. They seem to believe that what the world needs is a change in the way government attacks problems and fixes the anxiety of voters. This command-and-control approach, however, forces a misallocation of resources. And in Internet Time this will become visible in almost real-time, creating real political pain for the new president.
In contrast to what some people seem to believe, having the government take over the health-care system is not change. It’s just a culmination of previous moves by government. And the areas with the worst problems today are areas that have the most government interference education, health care and energy.
The best course of action is to allow a free-market economy to reallocate resources to the place of highest returns. In the midst of all the natural change, the last thing the U.S. economy needs is more government involvement, whether it’s called change or not.
Quote of the Day
But then our initial skepticism towards Europe’s new money quickly turned to admiration. The euro’s weaknesses were actually its great strength. Since no nation stood behind it, none would knock it down to get where it wanted to go. Just as the Europeans could never agree on sausages or military campaigns, they would never agree on the destruction of their money. If French wanted a weak euro to help enliven their economy, the Germans and the English would tell them to stop whining and show some backbone. If it were the English whose economy went soft and who wanted an easier money policy, likewise, the French would like nothing better than to deny it to them.
That is the charm of the Europeans; they detest each other mutually. The French would rather endure a depression themselves than spare the English one. And as for the Italians, the Irish, the Austrians…and all the other peoples at the periphery well, they can just look out for themselves!
But rather than leave the European Central Bank weak and subservient, it actually makes it stronger and more independent. Its officials may have no more integrity than officials of the Federal Reserve. Their economic theories may be no better. But at least they are unresponsive. In central banking, the consequence of inertia and inactivity is almost always salutary.
While the Fed has cut rates…raised them…and then cut them again, the ECB has done nothing. And the euro has almost doubled from its low and now trades for $1.55.