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Economics

Opinion and commentary related to economics, finance, and the war on free market capitalism.

Letter From England 2: Europe And The Culture War

in Culture/Economics/Politics/World by

If I were to draw up a list of the problems facing my country, and then to discuss their nature and possible solutions, I might be starting work on a rather long book. Instead, I will confine myself to what I think are the two most immediately pressing, and that are within the direct control of the British Government. These are our withdrawal from the European Union and the state of our so far uncontested culture war. I begin with Europe. When we voted, in June 2016, to leave the European Union, we were plainly willing an end without willing any means to that end. I think the consensus among those who voted to leave was that we should have a government, elected by and fully accountable to ourselves, that would set immigration and trade policies in our own interest. For various reasons, I choose not here to discuss immigration. Our most reasonable trade policy by my estimation involves free trade with the world in services and manufactured goods,…

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Even Partial Drug Legalization Goes a Long Way In Protecting Property Rights

in Economics/Politics by

The partial legalization of marijuana has not been particularly ideal. Thanks to high regulatory burdens on the marijuana-production industry, limitations on production volume, and high taxes, black markets have persisted within those states that have adopted a variety of legalization measures. Perhaps most burdensome has been ongoing federal banking regulations that essentially prohibit marijuana producers from using commercial banking services. The resulting reliance on physical cash has led in many cases to more robbery and inefficiencies within the cannabis industry. Nevertheless, even partial legalization has brought at least some of the benefits that one would expect. Cannabis products are now subject to commercial quality control. That is, a customer who walks into a dispensary or storefront now has a much better idea of what he’s buying. When cannabis sales took place only in the black market, one could only guess at the provenance of the product, and customers had no legal recourse in cases of fraud. One of the greatest benefits, from a laissez-faire perspective, has been the fact…

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The Tragedy Of The Commons In The Prison System

in Economics/Politics by

In a previous article, I wrote about how the war on drugs and the government monopoly on the legal system has created the Tragedy of the Commons in our justice system. Because legislators and police officers have every incentive to appear “tough on crime” but the cost of the sending a criminal to a courtroom is socialized, the courts have become increasingly backlogged. What that article did not cover is the related “commons problem” in the prison system and the consequences that follow. Where legislators and police officers have in-built incentives to send as many people through the courts as possible, a similar incentive is faced by judges and prosecutors to send defendants through the prison system. Because all judges and prosecutors share common access to prison space with no individual cost for doing so, there is zero incentive for the limitation on the sentence sought by the individual prosecutor or handed down by the individual judge.

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What A Conservative Health Care Bill Ought To Look Like

in Economics/Politics by

Now that House and Senate Republicans have released health care bills, I have come to one conclusion: the GOP is in need of major help writing a health care bill. They never seem to get it right, and they always fall short of making these bills conservative. Consequently, I have created a guideline that highlights the problems within the Senate and House bills, and how they can be fixed. Problem #1: Both House and Senate bills continue spending and subsidizing for poor people and states. Although it sounds moral to give the poor tax credits for health care, it will only hurt them in the long run. The moment insurers realize that the poor now have money to spend, they will raise prices to meet the overflow of demand. Eventually, health insurance will only become more expensive and the problem will be akin to rising college tuition rates. The worst part is that politicians have no sense of economics. To alleviate this problem, they will likely raise tax credits in…

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Beware The Predictions Of “Experts” Like Janet Yellen

in Economics by

Speaking in London, Federal Reserve chair Janet Yellen predicted recently that the “the system is much safer and much sounder” and explained that the Federal Reserve is prepared to deal with numerous enormous shocks to the economy. In her conversation with Lord Nicholas Stern, Yellen also went on to list the reasons that, thanks to central bank intervention, there is unlikely to be another financial crisis “in our lifetimes.” For those who have lived through more than one business cycle, however, alarm bells tend to go off every time an economist, central banker or high-ranking government official declares that there’s little to no danger of economic turmoil in the near future. There is a long history of spectacularly bad predictions being made shortly before economic crises. Famously, shortly before the Crash of 1929—one of the earlier crises that occurred on the Federal Reserve’s watch—Herbert Hoover proclaimed that “We in America today are nearer to the final triumph over poverty than ever before in the history of any land.” But,…

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The Racist History Of Minimum Wage Laws

in Economics by

In 1966, Milton Friedman wrote an op-ed for Newsweek entitled “Minimum Wage Rates.” In it, he argued “that the minimum-wage law is the most anti-Negro law on our statute books.” He was, of course, referring to the then-present era, after the far more explicitly racist laws from the eras of slavery and segregation had already been removed. Friedman’s observation about the racist effects of minimum wage laws can be traced back to the nineteenth century, and they continue to have a disproportionately deleterious effect on African-Americans into the present day. The earliest of such laws were regulations passed in regards to the railroad industry. At the end of the nineteenth century, as Dr. Walter Williams points out, “On some railroads — most notably in the South — blacks were 85–90 percent of the firemen, 27 percent of the brakemen, and 12 percent of the switchmen.” The Brotherhood of Locomotive Firemen, unable to block railroad companies from hiring the non-unionized black workers, called for regulations preventing the employment of blacks.…

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What Derek Carr’s Contract Teaches Us About Wall Street And Income Inequality

in Culture/Economics by

Derek Carr has just signed the most lucrative deal in NFL history, receiving a five-year extension worth $125 million with the soon-to-be Las Vegas Raiders. At $25 million per year, Carr edges out Indianapolis Colts quarterback Andrew Luck (though Luck’s contract did reward him with over twice as much in guaranteed money). Carr also becomes a big winner in the Raiders’ taxpayer-funded escape from Oakland, with his contract scheduled so most of the money kicks in after the franchise moves to income-tax-free Nevada. While the structure of Carr’s contract offers another opportunity to discuss the “jock tax,” it also serves to illustrate a more important issue: why Wall Street wins whenever the Fed expands the monetary supply.

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Texas Freedom Caucus Flexes Its Muscles

in Economics/Politics by

New players are now on the scene in Texas politics. The Texas Freedom Caucus, founded by members of the Texas House of Representatives dedicated to carrying out the will of liberty-minded Texans, is beginning to flex its muscles in the Texas State legislature. Texas Freedom Caucus members, led by pro-gun champion Jonathan Stickland, recently made their presence felt by killing more than 100 local and uncontested bills in short order. Such an unprecedented move was largely in retaliation for House leadership’s failure to address critical pro-liberty legislation during the 2017 legislative session.

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Buy American, Hire American

in Economics/Politics by

His original intent was to eliminate the H-1B visa program. However, upon meeting with corporate executives during his campaign, President Trump changed course, deciding the H-1B visa program didn’t need to be eliminated but reformed. Trump signed an executive order entitled “Buy American – Hire American”, designed to make it harder for U.S. companies to hire foreign help. It calls for four government agencies to suggest reforms to the H-1B visa program as soon as possible. Although the order doesn’t eliminate the H-1B visa program, its purpose is to ensure high-quality workers are being hired for “specialty positions” and not simply fill positions for cheaper wages. Before any U.S. company can decide to hire a foreign national, they must prove they tried every alternative route to find qualified American workers first. If they should need to hire a foreign national, they must be the best-of-the-best.

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Healthcare Isn’t a Right Or a Privilege

in Economics/Politics by
healthcare

A few days ago I had the opportunity to participate in a brief discussion on the subject of healthcare, more precisely, whether it is a right or a privilege. The person I was talking with is one of those who frames the debate in terms of a false dilemma: healthcare is either a right or a privilege. If it is not one it must be the other, the former being the morally upright side of the debate, the latter being on the side of evil corporations and systemic greed aimed at killing and robbing as many poor people as possible. Stated again, this is a false dilemma. Healthcare is neither a right or a privilege, it is a service subject to scarcity and hence, subject also to the principles of economics.

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End Public Financing Of Pro Sports Stadiums

in Economics/Politics by

If you love sports, you need to read this article. Everyone across the political spectrum should be opposed to publicly financed stadiums. The Oakland Raiders have recently announced that they are moving to Las Vegas. Their new stadium will be partly paid for with $750 million in public financing. If you hate sports, you will love this article. Show this to everyone you know, because your tax dollars shouldn′t be used to pay for other people′s entertainment. Unless you spend all of your free time in the library or at the park, your fun is either paid for by corporate sponsors or out of your own pocket. Major league sports are a huge business that makes millionaires out of the players and billionaires out of the owners. Pro sports teams can easily support themselves through ticket sales, sponsorships, and licensed merchandise.

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“Audit The Ed” – The Effort To Audit Federal Student Loan Programs

in Economics/Politics by

Do you have federal student loans? I do and, if you are anything like me, it sucks. Regardless of being on the receiving end of a loan, the program administered by the U.S. Department of Education is clearly flawed. In fact, one can easily make an argument claiming that because of widespread borrowing, the student loan program was a direct link to the epidemic of ever-rising tuition rates in American higher education. Millions take out multi-thousand dollar loans from institutions that have to comply with federal standards to allow such things and the end cost is a steeply subsidized environment. With the popularity of Federal subsidized loans, in effect, could corroborate the increase of higher education tuition prices by astronomical rates. The Federal Reserve Bank of New York conducted a study on the subsidization of higher education costs and concluded the darn’dest thing… Costs for tuition increase whenever someone takes out a loan.

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Animal Chiropractic: A Case Study On Government Overreach And Over-regulation

in Economics/Law by

You’re probably scratching your head right about now, aren’t you? Well, let me take a few minutes to explain to you the level of importance the following case carries for the larger narrative of governmental overreach and over-regulation. No, it is not a federal agency defying the new administration. Better yet, it takes place at the state level as an evident issue that affects many across the Union.

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The Rise Of Modern Environmental Federalism

in Economics/Politics by

Too often, the realm of environmental policy has gone down unforgiving roads. In terms of regulating industry being one of those many roads, the devil in the details become exposed. At this point, a Pandora’s box of nonsensical regulation envelopes the free marketplace with unrealistic standards that limit and restrict growth for an economy. Upon the transition of power, visa vi the transition of an Obama White House to a Trump White House, the American Environmental Protection Agency had nearly unchecked power. Now, as we see the rise of individuals like Scott Pruitt and Ryan Zinke to lead the nation’s environmental agencies, a shimmer of hope, through the guise of a resurging call for environmental federalism is on the horizon. Pruitt, the former Attorney General for the state of Oklahoma, in particular, is a man that has built his career on fighting against unconstitutional federal overreach. He knows first hand the horrors of the central government asserting its misguided and misinformed agendas on the state government, directly costing taxpayers…

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The Conservative Case Against Right To Work

in Economics/Politics by

On Thursday, the Missouri State Legislature passed right to work legislation, sending it to the desk of Governor Eric Greitens. Should Greitens sign the bill, Missouri would become the 28th right to work state. Right to work laws are becoming more and more popular among conservatives and have spread to many new states in recent years. However, the effect of right to work on the freedom of business owners is not usually considered. Right to work laws allow employees to opt-out of paying union dues or being a member of a union as a condition of employment at a given firm. For public sector workers, right to work is a must. Postal unions, teachers unions, and other public sector unions have been financing Democrats for years. Between 2012 and 2014, unions donated over $400 million to left-wing causes. After union-backed politicians get into office, they often appoint union leaders as those who negotiate with the unions, leading to inflated wages for government workers and inflated taxes for the rest…

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Trump Vows To Expedite FDA Approvals

in Economics/Politics by

President Trump met Tuesday with the heads of several pharmaceutical companies at the White House. During the Oval Office meeting, Trump discussed bringing more pharmaceutical jobs back to the U.S. and making drugs more affordable. He urged the drug companies, which included Johnson and Johnson, to bring more jobs back to America, saying, “So you have to get your companies back here. We have to make products…” “We have no choice,” he added in typical Trumpian fashion. He called on the execs to lower drug prices, which are exorbitant, saying, “We have to get prices way down.” Trump’s first point was similar to what was discussed in his CEO meeting last week.

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Awkward: Trump’s Wall Is A Progressive Policy

in Economics by
trump

‘This Congress is going to be the busiest Congress in decades — maybe ever.’’ With these words, President Donald Trump urged fellow Republicans in Congress to help him halt illegal immigration by supporting his plan to build a United States-Mexico border wall. But a wall that isn’t erected by the private land owners bordering Mexican land owners isn’t a wall. It’s government spending. And if government is spending, someone else is footing the bill. That someone is you and me.

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Free Markets At Home The Cure To Outsourcing Abroad

in Economics/Politics by

Fixing the outsourcing epidemic requires looking to treat the cause, not the symptom. The case for free trade is simple. Businesses should be able to locate where they want and import what they want. International free market activity is fundamentally parallel to that which occurs within U.S. borders. Thus, when everyone is doing what they are most efficient at, all benefit. For example, Floridians may be efficient at producing produce while Missourians may be most efficient raising livestock. Kansans may be best at growing crops while Pennsylvanians may be best at making steel. The same holds true internationally. The U.S. may be the best at developing technology while Korea may be the best at producing said technology. Canada may be a great exporter of maple syrup while Mexico may be great at producing boats.

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President Meets With CEOs. Here’s The Problem…

in Economics/Politics by

“They’re going to have to pay a border tax — a substantial border tax,” President Trump pledged Monday morning during a White House meeting with twelve CEOs including the heads of Dow Chemical, Proctor and Gamble, and Ford. He went on to thinly veil threats against the businessmen, saying, “All you have to do is stay. Don’t leave. Don’t fire your people in the United States.” The President also discussed a 75% regulation cut and tax cuts for both the middle class and for corporations and a ‘big border tax.’ This is troubling for several salient reasons. Primarily, the public image of President Trump holding White House meetings with businessmen just doesn’t wash. This meeting, at least, was open to the media, however, previous meetings with high-level executives have not been. What was discussed during these back-room meetings? We don’t know. Did the president offer incentives or threats? We don’t know.

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Why Does The Left Riot? Because They Don’t Work!

in Culture/Economics/Politics by

On Saturday, hundreds of thousands of protesters took to the streets of Washington D.C. to express their disdain for the live incarnation of sexism, President Donald J. Trump himself, and the misogynist patriarchy during the Women’s March on Washington. Throughout the 2016 election cycle, massive and unprecedented rioting and protesting has taken place at Trump rallies, after election night, and again during and after the inauguration. What brings the left out in force to riot? And why weren’t Republicans doing the same thing to President Obama, Bernie Sanders, and Hillary Clinton? Rioting became out of control during several Trump rallies this past year, the most notable being the March 11th, 2016 rally at The University of Illinois in Chicago. Trump was forced to cancel the event after agitators violently clashed with Trump supporters inside and outside the venue. I attended another Trump event days later. Astroturfed protesters showed up in force carrying Mexican, and ironically, Soviet flags. As I said at the time, they were the worst behaved people…

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Hands Off My Healthcare: Opposition To Obamacare, Explained.

in Economics/Law/Politics by

Unless you’re Bill Belichick, you may have heard a thing or two about the impending repeal of The Affordable Care Act on Snapface or Instachat. Actually, you’ve probably heard quite a lot. From Esquire stating 30 million people lost their healthcare overnight, to countless pithy tweets and Facebook quotes about the evils of the Republicans for wanting to deny coverage to the American people. The problem is that this isn’t true. The Affordable Care Act has NOT been repealed. Nor have any provisions been dismantled. The infamous late-night vote you surely read about was to authorize congress to modify Obamacare’s funding down the line – setting the path for a repeal. Democrats attempted to attach various amendments, locking the republicans into keeping certain provisions during this process, which were shot down. That does not mean they won’t be kept. It means they didn’t lock themselves in before they had a chance to modify the bill. Not a single thing about Obamacare has been changed. Any source that fails to mention this information is…

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Taxation, Regulation: Not Reasons To Legalize Pot

in Culture/Economics/Law/Politics by

In the marijuana legalization debate, two talking points are often utilized: taxation and regulation. These are good arguments from a liberal perspective, but quite problematic in a conservative or libertarian context. The basis for justifying the legalization of marijuana is simple. Consenting adults should be allowed to choose what to put in their bodies, whether or not it’s harmful, so long as there are no externalities. This is the only legitimate and principled basis for legalization.

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Is Buying American Really Being American?

in Economics/Philosophy/Tech by

On Monday night, “Dirty Jobs” host Mike Rowe joined Tucker Carlson on Fox News to discuss Ford’s and Chrysler’s respective plans to reinvest in U.S. manufacturing. Rowe, who is a proponent of technical and skilled jobs, told Carlson, “Get a skill that’s in demand, that’s really in demand, that can’t be outsourced. Plumbers, steamfitters, pipefitters, carpenters, mechanics, those men and women right now … can pretty much write their own ticket”. Rowe is right about skilled jobs. According to the Manhattan Institute, there are around a half-million U.S. skilled jobs that aren’t being filled. Millennials are spending their time in the college safe spaces instead of doing the ‘dirty jobs’ which can pay well. However, when Rowe talked about making things in the U.S. he got it wrong. “There’s just something … larger at work here,” Rowe said. “It has to do with our identity, it has to do with what it feels like when we’re actually making things as a country.” This ‘be American, buy American’ attitude has…

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Relax, Hippies: Jeff Sessions As Attorney General Isn’t The End Of The World

in Culture/Economics/Politics by

The hypocritical liberals are sounding the alarms about Jeff Sessions being President Trump’s pick for Attorney General. Suddenly and conveniently, they care about civil liberties and the rule of law again now that they have lost political power. Nevertheless, they are blowing smoke and relying on ignorance to push their tired agenda. The George Soros-funded Drug Policy Alliance (DPA) is especially ham-fisted in their nauseating “analysis” of the appointment. Purportedly a nonpartisan group, their true colors were shown after they released a ridiculous screed filled with so much nonsense that looks as if it was drafted by John Podesta himself:

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The Trump Rally: Stocks Fly High As Confidence Surges

in Economics/News/Politics by

The election of President-elect Donald Trump last month has awakened, what some people are calling, the “animal spirits” of capitalism. Anyone with a 401k or money in the stock market could tell you that things are going very well at the moment. The election of President-elect Trump and conservative, pro-market Republican majorities in the House and Senate represents a turning of the page from eight years of growing tax burden, government spending, and red tape. The Trump Rally, as some pundits are calling it, has resulted in the Dow Jones Industrial Average jumping 1,600 points since 2016’s election day. Such a large jump — well up into the nineteen thousands — has many market watchers discussing the prospect of the Dow breaking 20,000 points. The result has been nearly two trillion dollars in wealth generated for the tens of millions of Americans with money in the stock market.

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Did The Free Market Kill Coal?

in Economics/Politics by

Would you like to know my secret to turning my environmentalist friends into stalwart defenders of the marketplace? The answer is simple: coal. You would be amazed by the reversal in rhetoric witnessed right before your eyes, typically accompanied by a big dose of schadenfreude aimed at Appalachian people. The “free market killed coal” adage apparently qualifies as ironic humor in leftist circles. Never mind the tens of thousands of families, hundreds of communities, a plethora of near-bankrupt school districts, and so many others left behind in the wreckage of coal’s decline. They’ll laugh as states who have endured generation after generation of poverty face choppy fiscal seas, forcing indelicate, hammer-doing-a-scalpel’s-job reductions in infrastructure, education, and health spending. None of these things seem to matter when it isn’t their political constituency on the destructive end of creative destruction. My instinctual reaction to this “meme-ification” of my home state’s suffering was anger. I wanted to show everyone how truly uncompassionate the left is about these sorts of things. But now…

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Dear Thomas Sowell — Thank You

in Economics by

Earlier this week, shockwaves were sent through the liberty movement. At age 86, Thomas Sowell, one of the most gifted and influential libertarian economists of our lifetime, announced that he is finally putting the brakes on his weekly column. This came as sad news to many. Over the past 25 years, Sowell has guided countless youngsters to the path of liberty for the first time. One of them was me. I was a liberal, both economically and socially, until I began reading Sowell’s column in school. I’ve always believed that, as president-elect Donald Trump frequently says, the system is rigged. While there is some validity to this claim, I, like most liberals, took it to the extreme.

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Work Force Participation Down Along With Unemployment

in Economics/Politics by

The latest jobs report is out for November 2016 and the media is in a frenzy over the fact that the unemployment rate has fallen to a nine year low at 4.6%. However, as anyone who has a passing familiarity with the voodoo science of statistics will tell you, numbers can be made to dance to any tune you wish and, contrary to popular opinion, they often lie. And while a 4.6% unemployment rate seems at face value to be great news for the economy, it is unwise to take anything from the government at face value and that holds doubly true for statistics. When you dig a little deeper into the actual numbers, though, a much more complex and much less vehemently optimistic picture of the US labor market emerges. For instance, the work for participation rate which gauges the overall percentage of the population that is actively engaged in the work force either through employment, the search for employment, or the application for unemployment benefits fell yet…

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‘Economics Is Hard’: Groupthink Is Why We’re In Such Bad Shape

in Economics by
economics, hands, politics

In Principles of Economics, Carl Menger corrected the theoretical mistakes made by the old classical school. At the time, the founder of the Austrian School of economics seemed to want to make economics accessible to everyday people, which may explain why he exemplified the nature of economic value in his book, making sure readers understood that economics revolve around the actions of individuals. Described by many as “the best introduction to economic logic ever written,” Menger’s Principles inspired young economists like Ludwig von Mises to explore the populist nature of economics in an attempt to make the case that economics was for everyone, and that practical knowledge of economics can help even the most uneducated among us to prosper. Despite the honorable efforts and the exponential growth of influence the Austrian School of economics has exerted over the years, the reality is that, for most individuals around the globe, economics is hard.

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Trump’s Deal Cutting Just Won’t Cut It

in Economics/Politics by

Last week, President-elect Donald J. Trump and his administration reached a deal with United Technologies, holding company of the air conditioner and appliance manufacturer Carrier, to keep around 1,000 jobs in the United States. Trump has promised on the campaign trail that he would keep those jobs on US soil since Carrier first announced that they would move their manufacturing from Indiana to Mexico in February. Outlets from Breitbart to The Young Turks have praised the deal. What a great power move! Trump isn’t even in office yet, and he’s already closing deals. But what if Trump’s latest deal is filling the swamp rather than draining it? Carrier’s decision was purportedly based on tax breaks promised by Indiana Governor and Vice President-elect Mike Pence in conjunction with Trump’s planned pro-business policies. There’s an issue with that narrative, however. The total in tax breaks is $7 million. The cost to keep those jobs in the States: $65 million. The incentives were offered months ago and subsequently declined by Carrier, so it’s…

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A Cash Crop To Rebuild America: The Cannabis Revolution Means Better Public Health And Limitless Prosperity

in Culture/Economics/Politics by

Whether you like it or not, the cannabis revolution is underway throughout America. Four states have already legalized marijuana for recreational purposes, and four more states are slated to join them after the results of last month’s election. On Nov. 8, the big winner wasn’t Donald Trump – it was the cannabis plant. It reigned triumphant in Florida, North Dakota, Arkansas, California, Massachusetts, Maine and Nevada in varying degrees. Of course, the prohibitionists are out in full force with a propaganda blitz of their own against the progress being made. Some warn of “killer weed” while other desperate individuals say that marijuana “changes the brain” causing mass murderers to snap and commit acts of terror. Many of these disingenuous folks are lobbyists for pharmaceutical corporations or law enforcement groups. They lie to the public because they don’t want their gravy train drying up. Nevertheless, the winds of change are at hand whether the prohibitionists like it or not. The marijuana industry is opening up an era of prosperity that…

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A War Not Lost: The Conservative Plan To Defeat Poverty

in Culture/Economics by

In his far-reaching effort, known as “A Better Way”, to define a coherent, conservative legislative agenda, Speaker of the House Paul Ryan brought together the talent and put in the time to chart a path forward in the War on Poverty. For too long, conservatives have allowed the War on Poverty to be waged by leftists, bureaucracy, and those whose favorite part of the Constitution is the taxing and spending clause. The product of these misguided technocrats couldn’t signal a more resounding defeat. They’ve waged a battle in which success was measured by inputs rather than outcomes. Rather than focusing on helping people, they’ve chosen to pride themselves on the financial commitment, upwards a trillion dollars, that they’ve made to do so. When you take a step back from the trench warfare of politicized headlines and poll-tested talking points, conservative principles provide the ideal framework for combating poverty and lifting people up. American conservatism is built on the belief that every person is granted inalienable rights from God, a…

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Trans Pacific Partnership Is About Control, Not Free Trade

in Economics by

The latest “free trade” agreement, the Trans-Pacific Partnership (TPP), is lurking behind the headlines. Congress is poised to renew trade promotion authority (TPA), also known as “fast track” negotiating authority, which will make the ratification of the TPP more likely, just as happened previously with NAFTA and other so-called free trade agreements. This is not a good thing. Those in favor of free enterprise, free trade, capitalism, and private property rights should oppose the TPP and the fast-track authority that makes its passage more likely. Let me explain why. The details of the TPP are obscure, as it is being negotiated in secret, and its provisions are arcane. For this reason, the average citizen is uninterested in or knows little about this measure. Those in favor of free trade assume it’s a positive measure, but they don’t know much about it. Moreover, both left and right are wrong about the TPP. The left is opposing the TPP for the wrong reasons, and the right and corporate interests (allied with Obama) are using disingenuous arguments…

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What Would Ludwig Von Mises Do In Venezuela?

in Economics by

The crisis in Venezuela is the most modern illustration of the horrific consequences of socialism and the devastating reality of hyperinflation. What makes this disaster all the more infuriating is that it could have been avoided with a basic understanding of history. We’ve seen the disaster of socialism and interventionism in various forms play out across the world time and time again with similar results, and yet new generations of central planners — backed by ideologically aligned intellectuals — are consistently able to fool people into believing that “this time will be different.” Ludwig von Mises himself lived through one of these historical episodes. Following defeat in World War I, the Austro-Hungarian Empire was in a state of crisis. The Habsburg monarchy ended in 1918 and with it came the dissolution of the Empire. The German-speaking population formed what we now know as Austria, and the nation soon faced a severe economic crisis. The government, led by a coalition of Social Democrats, Christian Socialists, and a Nationalist Party, implemented…

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Zoning: A Tragic Public Policy

in Economics by

In the view of most concerned professionals, zoning legislation is a necessary bulwark against chaos in urban land use. Without zoning, it is contended, external diseconomies will abound: pickle works will come to rest next to single family homes, glue factories beside country clubs, and oil refineries in proximity to restaurants. Moreover, it is feared that rapacious land developers will erect, profit from, and then abandon buildings, placing undue strain on the capacities of municipal services. Further, the unzoned city will be one of haphazard construction, falling property values, instability, disregard for neighborhood “character,” irrational allocation of property—and a haven for unscrupulous speculators. Zoning is the attempt to suppress these supposed market defects by legislatively prohibiting incompatible uses of land. Under this ordinance, the pickle factory would be prohibited from residential neighborhoods and required to locate itself in a special industrial area, reserved for that kind of operation. There, surrounded by similar uses, it would presumably do little harm. The zoning idea has a certain appeal. What, after all,…

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In Defense Of Trump’s Deal With Carrier

in Economics/Politics by

Donald Trump hasn’t yet made the move from Trump Tower to America’s most expensive public housing, but he was able to come through with one campaign promise this week by announcing a deal with Indiana-based Carrier Air Conditioning that will keep almost 1,000 jobs in the state. As reported, the deal seems largely focused on the State of Indiana offering millions in tax breaks and an understanding that the Trump administration will push for regulatory and corporate tax relief at the Federal level. While the jobs Carrier will be keeping in the US only makes up about a third of the jobs the company had planned to move to Mexico, the underlying deal seems to reflect a larger commitment to addressing the corporate tax and regulatory burdens that have long held back the American economy. While some have described Trump’s approach as crony capitalism, if the terms of the deal really are limited to tax relief, such claims are baseless. While it is true that tax breaks for specific companies are less ideal…

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“Buy America” Legislation Is The Wrong Way To Put America First

in Economics/Politics by

A large part of Donald Trump’s stunning upset against Hillary Clinton was the rise of the working class American who has long been left behind by the political elite. Overbearing regulations and high taxation drive good jobs out of the country, where businesses can get the job done for cheaper. Now that the controversial Republican businessman has gone from longshot to President-elect, expect more discussion regarding stopping the outsourcing of jobs and bringing work back home. “Buy America” legislation is again front and center in Congress. Although Republicans often adopt the America First rhetoric, it is the Democrats who are pushing the legislation to force businesses to prefer American products versus foreign-made products. Is this a moment of hypocrisy for the Republican Party as it rides in on an America First wave?

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How Inflation Destroys The Wealth Of Nations

in Economics by

Brendan Brown is a rara avis — a practicing financial economist and shrewd observer of financial markets, players, and policies, whose prolific writings are informed by profound theoretical insight. Dr. Brown writes in plain English yet can also turn a phrase with the best. “Monetary terror” vividly and succinctly characterizes the policy of the Fed and the ECB (European Central Bank) to deliberately create inflationary expectations in markets for goods and services as a cure for economic contraction; the “virus attack” of asset price inflation well describes the unforeseeable suddenness, timing, and point of origin of asset price increases caused by central bank manipulation of long-term interest rates and the unpredictable and erratic path the inflation takes through the various asset markets both domestically and abroad. Indeed Dr. Brown’s prose is reminiscent of some of the best writers in economics and economic journalism such as Lionel (Lord) Robbins and Henry Hazlitt. And like these eminent predecessors, Brown is generous to a fault in carefully evaluating the views of those…

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Airbnb: Regulation Without Government

in Economics by

Does Airbnb allow landlords to run unregulated hotels? A January report from the American Hotel and Lodging Association says yes: “From Air Mattresses to Unregulated Business: An Analysis of the Other Side of Airbnb.” But the terms chosen for the report assume a choice between political regulation and no regulation. This is a false choice. Not only is private regulation possible, but we have every reason to prefer it to political regulation.  The market process generates countless mechanisms to “regulate” business transactions. Once we know what to look for, we see that not only is private regulation possible, but we have every reason to prefer it to political regulation. The case of Airbnb is a perfect example. During my recent participation in the “Free Market Road Show” in Europe, I was on a panel discussing the sharing economy. In context, it became clear that the other panelists and I were supposed to contrast the benefits of operations such as Uber and Airbnb with the potential downsides. An audience member…

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We Didn’t Humanize Markets, Markets Humanized Us

in Economics by

Over Labor Day weekend, I saw many friends arguing that labor unions and government intervention “humanized capitalism” by giving us the 8-hour workday, the 40-hour workweek, ending child labor, and so forth. Unfortunately, these folks have their history backward. The wealth produced by capitalism allowed us to indulge our humanitarianism in ways not possible when we were on the edge of survival.We didn’t humanize capitalism, it humanized us. The wealth produced by capitalism allowed us to indulge our humanitarianism in ways not possible when so many were living on the edge of survival. You can’t have 8-hour workdays, 40-hour work weeks, and no child labor, until the material conditions exist to make such changes feasible for a large number of people. Workers didn’t work long hours, and kids didn’t work at young ages, because employers held a gun to their head. And they didn’t do it because they loved to work hard, long, uncomfortable hours.

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Why Unions Care About Your Paid Sick Time

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Labor unions negotiate higher wages and better benefits for union members. That’s fine – that’s their purpose and it’s why some people choose to join unions and pay union dues. The unions have to perform a delicate balancing act. If they don’t push for better wages and benefits for their members, then workers will have less of an incentive to join unions. But, as unions attain better wages and benefits for their workers, non-union labor starts to look much more attractive to employers and so employers will tend to prefer to hire non-union labor. If union labor is more productive than non-union labor, then the fact that union labor is more costly might not be a problem. But what’s a union to do when non-union labor is both cheaper and as productive as union labor?

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The Authors Of Prosperity

in Economics/Politics by

Amid a torrent of rumors surrounding the allegedly chaotic Trump transition, there have been some glimmers of hope emerging from the fledgling ascendance of the Manhattanite billionaire to the halls of power in Washington, DC. Vice President-elect, Mike Pence, has taken the reins of the transition process and his first order of business was to fire all lobbyists from the team, a promising sign that Trump plans to make good on his campaign pledge to “drain the swamp.” Coming on the heels of this welcome news is the report that the president-elect will order a ban on all lobbying activities for outgoing administration officials. And yet more happy news: James Clapper, head of the NSA, serial liar, and establishmentarian to boot, has resigned. The swamp is draining itself. As hopeful as all this appears, these optimistic developments are tempered by headlines pronouncing an energetic pessimism by those who refuse to find a silver lining in the outcome of our recent electoral contests.

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In Defense Of “Vulgar Libertarianism”

in Economics/Philosophy by

One difficult aspect of living as a libertarian in a less-than-free society is that we cannot describe to our opponents with absolute certainty how a genuinely free market would look. We are left to rely on thought experiments and the examples of existing businesses models to compare to the State. If I want to discuss how state intervention raises the costs of healthcare, for example, I may compare it to the cell phone industry, which must do the opposite in order to compete in the marketplace. Should we reach the conclusion that the higher prices are the result of government, assuming we want lower healthcare costs, then we definitely don’t want socialized healthcare, which cannot provide any final or ongoing solution. Unfortunately, since we don’t live with a free market — and indeed, the state plays a role in every industry, including the ones mentioned above — we don’t have any perfect or pristine examples. As a result, some defenses of freer markets (which are, in fact, not pure…

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Making Protectionism Great Again

in Economics/History/Politics by

The 1760’s called, they want their economic policy back. Am I the only one who’s a little tired of both major party platforms scraping the bottom of the barrel for economic theories that’ve been disproven since before we were born? I’m a libertarian. A deep, cynical, state-is-obsolete libertarian who finds his views overlapping heavily with conservative thought and Republican politics. That’s why it irks me that this election cycle has made abundantly clear that there is no home for hands-off economics in the major party system. From the days of Saint Ronald Reagan, the Republican Party has been billing itself as the bastion of laissez faire fiscal restraint. If you let the market correct itself, the employers create jobs and everyone prospers. Fair. But what is this year’s Republican standard bearer saying about the economy? Why, he’s promising to restrict international trade, of course. Donald J. Trump’s entire economic appeal from the early pre-primary days has been nothing but recycled Mercantilism. Mercantilism is an economic theory fresh from the…

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The Bastardization Of Knowledge

in Economics by

Friedrich August von Hayek published The Use of Knowledge in Society in the American Economic Review in 1945. With the world turning towards central economic controls, Hayek set out to describe what he called “the problem of a rational economic order.” Hayek’s emphasis here is how a system of economic order is to overcome the problem that much of the information relevant to decision-making is dispersed among many individuals; often among those not in direct communication with the decision maker. However, a decision about the use of resources will inevitably be made by a decision maker. Hayek describes planning as “the complex of interrelated decisions about the allocation of our available resources.” This planning is to be done by decision makers in society. The question then becomes: Who will do the planning for society, and how will knowledge about specific events, individuals’ plans, and preferences be communicated? In response to these posed questions, Hayek elaborates that the dispute in economics is not whether planning is to be done or…

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The Establishment, The Real Deplorables

in Economics/Politics by

To those who say that Trump is going to lose this election: conventional wisdom agrees with you, as do the various betting pools out there. Of course, Brexit reminds us that the anti-establishment, populist vote in this election cycle is probably larger than the polls would indicate. Still, is it likely that lightning will strike the same place twice and give us two Brexits in the same year? Again, conventional wisdom would say no, which is why you have history, most current polls, and common sense on your side when you say that the election is lost. My sense is that we shall know on Sunday evening if Trump can come back from his present deficit in the polls. Either Trump acts like a president and manifests a greater command of the issues than he did in the first debate, or he looks like an amateur out of his league. None of this will matter to avid fans like myself who are motivated either by populist anger against elites or,…

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Regulations Violate The Checks And Balances Of a Representative Republic

in Economics/Politics by

Big business is ruining this country. Big business is using its vast resources to bribe politicians. Big business is using its lawyers to abuse the legal system to ensure favorable court rulings. Big business is not afraid of small fines passed out by the government, as this is just the price of doing business. Big business does not care about its workers because they can easily be replaced. These statements, while some would argue that they are applicable today, are actually statements regarding the business condition in the United States between the late 1800’s and early 1900’s. If you thought politics were corrupt today, you should have seen them 125 years ago. Back then a business was free to break the law just as long as they paid the proper bribe to the appropriate authority. If you wanted to be open on Sunday, pay the police commissioner. If you wanted the court to dismiss your case, make sure you donated to the appropriate reelection campaign. If you wanted no interference…

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Three Myths About Venezuela’s Opposition

in Economics/History/Politics/World by

Venezuela’s current political crisis has drawn much attention worldwide. The shortages, increasing violence, skyrocketing inflation, and the increasing militarization of its economy are all fixtures of Venezuela’s current national disaster. Opposition movements have naturally arisen in response to Venezuela’s squalid state, with the Democratic Unity Roundtable (MUD) leading the charge against the current ruling class.  Despite the unprecedented awareness of Venezuela’s delicate situation, considerable amounts of disinformation abound both in mainstream media and social media coverage of these events. This article seeks to dispel many of these myths and misconceptions that concern Venezuela and its political opposition. The Venezuelan Opposition is Attempting a Coup Against the Current Government To carry out a coup, opposition forces must at least possess a high degree of political clout, military resources, and firepower. It could be argued that current president Nicolás Maduro, who does not possess the same type of charisma and popularity as his predecessor Hugo Chávez, is leading a government that, in theory, should be more susceptible to potential coup attempts. However, the…

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Single-Payer Sucks

in Economics/Politics by

Proponents of universal healthcare hold one of the most morally attractive political positions of present day: healthcare is a natural human right and should be readily available to all, regardless of socioeconomic standing.  On top of their moral high ground, they pile on supposed proof of single payer’s merits by pointing to Canada, Scandinavia, and various other countries.  It’s their belief that if only such a system were implemented in the US, the problems associated with healthcare would largely be alleviated. It’s a very emotionally pleasing opinion to hold.  Single-payer advocates pat themselves on the back for being so benevolent to the poor and insurance-less, claiming that if it weren’t for their efforts, countless people would unnecessarily die.  Unfortunately, positive emotions for its proponents is the only good thing that comes from single-payer healthcare. When subjected to reason, the only way for a single-payer system to look attractive is to analyze it solely with emotion.  Logical and economic reasoning, along with an honest moral assessment, serve to show such…

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The Comparative Advantage Of The U.S. Economy

in Economics by

Recently, there has been a large amount of media attention focused on Donald Trump’s hatred of the North American Free Trade Agreement (NAFTA). This animosity has also been targeted at CEO Mark Fields’ to move parts of Ford’s manufacturing to Mexico. Sadly, logic and fact have taken a backseat in both of these discussions. Clichés from Trump dominate the media scene, including a recent quote highlighted on CNN, “NAFTA has destroyed our country.” This statement is far from the truth. No matter what clichés Trump or any other political candidate throw at NAFTA, the American people should not be fooled: NAFTA allows the U.S. to succeed in attracting higher-paying jobs, which is currently the country’s comparative advantage on the international market. Trump’s main argument is that NAFTA allows for jobs to easily move from the United States to Mexico, thus hurting the U.S. economy. Trump’s proposed solution includes destroying the NAFTA pact and the implementation of a hefty 35% tax on all imported cars. Not only will Trump’s proposed…

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