Local Currency Is Like a Car That Can’t Leave Town
By George Selgin
How’s this for a great idea: we build a small fleet of cars, and market them to people in the local community. How do we compete with Ford, G.M., Toyota, and all those other huge car companies? Easy.
You see, our cars will have special octane requirements that will prevent them from refilling at ordinary gas stations. Instead, we’ll set up a few local stations that will be the only ones equipped with the right fuel. To top it off (so to speak), our cars will also have small gas tanks to prevent them from reaching the next town on a single tank. (Should we decide to go electric, we can instead equip them with special plugs and voltage requirements to accomplish the same result.)
You see, our cars will have special octane requirements that will prevent them from refilling at ordinary gas stations. Instead, we’ll set up a few local stations that will be the only ones equipped with the right fuel. To top it off (so to speak), our cars will also have small gas tanks to prevent them from reaching the next town on a single tank. (Should we decide to go electric, we can instead equip them with special plugs and voltage requirements to accomplish the same result.)
The High Costs of an Immediate Repeal of DACA
By Ike Brannon
Denizens of Washington DC have been having a field day speculating about what sorts of action Donald Trump may take on the first day of his presidency. One possible Obama-era executive order some of his supporters have urged him to repeal is the Deferred Action for Childhood Arrivals, or DACA, which allows children of illegal immigrants brought to this country by their parents to receive temporary protection from deportation, work permits, and a path to citizenship if they have not committed any crimes.
The Right Way to Cut Wasteful Defense Spending
By Christopher A. Preble
President-elect Donald Trump has made cutting wasteful defense spending a top priority, specifically targeting federal defense contracts. He called defense industry leaders to the proverbial woodshed to protest costly projects, including threatening on Twitter to cancel Lockheed Martin’s F-35 Joint Strike Fighter and Boeing’s contract to build two new Air Force Ones.
These tweets send a strong message, and both Boeing and Lockheed have said they intend to work with Trump to reduce program costs. But significantly reducing bloat in the defense budget will require much more than tweets.
These tweets send a strong message, and both Boeing and Lockheed have said they intend to work with Trump to reduce program costs. But significantly reducing bloat in the defense budget will require much more than tweets.
End To “Wet Feet, Dry Feet” Is Good for Communist Cuba, Bad for Freedom.
By Alex Nowrasteh
President Obama just ended a decades old policy that allowed escapees from Communist Cuba to enter the United States without a visa. Known as “wet feet, dry feet,” it allowed Cubans who showed up at America’s borders to enter lawfully and earn an expedited green card. Cuba’s brutal Communist dictatorship, proximity to the United States, and history were the reasons for this relative openness. Now he sends a clear message to Cubans seeking freedom: stay away.
And everybody thought Donald Trump was going to be the anti-immigrant president.
And everybody thought Donald Trump was going to be the anti-immigrant president.
Top 10 Ways Obama Violated the Constitution during His Presidency
By Ilya Shapiro
The Obama administration has been the most lawless in U.S. history. I don’t mean that in the Nixonian sense of personal corruption, whereby the president is personally above the law, although the idea that Barack Obama’s tenure has been ethically pure is laughable.
No, my accusation rests on the 44th president’s seeing himself as professionally above the law, ignoring the executive branch’s legal limits and disrespecting constitutional bounds like federalism and the separation of powers.
No, my accusation rests on the 44th president’s seeing himself as professionally above the law, ignoring the executive branch’s legal limits and disrespecting constitutional bounds like federalism and the separation of powers.
Trump Calls House GOP Tax Plan ‘Too Complicated.’ He May Be Right.
By Daniel J. Mitchell
The hot new term in the world of tax reform is “border adjustability,” which refers to when governments have systems that tax imports and exempt exports.
This approach is widely associated with European-style credit-invoice, value-added taxes (VATs), and Republicans appear poised to bring something similar to our shores.
As part of their “Better Way” tax plan, House Republicans are proposing to change the corporate income tax into a destination-based, cash-flow tax (DBCFT), which in itself is a kind of border-adjustable tax.
This approach is widely associated with European-style credit-invoice, value-added taxes (VATs), and Republicans appear poised to bring something similar to our shores.
As part of their “Better Way” tax plan, House Republicans are proposing to change the corporate income tax into a destination-based, cash-flow tax (DBCFT), which in itself is a kind of border-adjustable tax.
Trump’s Protectionism Isolates US on Global Stage, Emboldens China
By Christine Guluzian
Chinese President Xi Jinping’s address at the World Economic Forum in Davos, Switzerland Tuesday may have sent the strongest signal yet that China is more willing than the United States to champion free trade and globalization, thanks to President Donald Trump’s protectionist and anti-trade leanings.
At the commencement of the WEF’s annual summit, Xi — the first Chinese head of state to participate in Davos — spoke of the importance of globalization for global economic growth, whereas President Trump’s representative at Davos, Anthony Scaramucci, spoke of America’s centrality as indispensable for globalization.
At the commencement of the WEF’s annual summit, Xi — the first Chinese head of state to participate in Davos — spoke of the importance of globalization for global economic growth, whereas President Trump’s representative at Davos, Anthony Scaramucci, spoke of America’s centrality as indispensable for globalization.
The Women’s March Deliberately Ignored Huge Numbers of Women
By Emily Ekins
The news cycle Saturday was dominated with coverage of the hundreds of thousands of women, many donning pink hats, gathering in major cities for “women’s marches” to protest Donald Trump. Anyone watching the news would have gained the distinct impression that these marches purported to speak for women across the country, with headlines like: “Women’s Marches Protest Trump Election & Agenda,” and organizers emphasizing that “we represent half of this country.”
But could we be honest about what this really is? This isn’t a “women’s march” but a liberal women’s march. Despite the organizers’ promises to the contrary, these marches were by no means inclusive and failed to represent the diverse array of priorities that many women across the country have. Some were even actively discounted.
But could we be honest about what this really is? This isn’t a “women’s march” but a liberal women’s march. Despite the organizers’ promises to the contrary, these marches were by no means inclusive and failed to represent the diverse array of priorities that many women across the country have. Some were even actively discounted.
Inauguration Speech Wrongly Demonized Free Trade
Inauguration Speech Wrongly Demonized Free Trade
Picking up where he left off during the presidential campaign, President Trump made economic nationalism a central theme of his inauguration speech. Using dark language and imagery, he referred to shuttered factories and workers left behind, and asserted that from now on it will be “America First.”
To this end, he vowed to “protect our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs,” and claimed that “[p]rotection will lead to great prosperity and strength.” And he set out two simple rules to accomplish all this: “Buy American and hire American.”
To this end, he vowed to “protect our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs,” and claimed that “[p]rotection will lead to great prosperity and strength.” And he set out two simple rules to accomplish all this: “Buy American and hire American.”
Monday, January 23, 2017
The Failures of Obama's Foreign Policy
The Failures of Obama's Foreign Policy
As Murray Rothbard often emphasized, the free market and a peaceful foreign policy are indispensable partners. We cannot maintain a free market if the government engages in a bellicose foreign policy. A powerful and aggressive state constantly engaged in war requires vast resources to sustain it, and “military socialism” is an all-too-present reality.
From this perspective, a recent interview of Andrew Bacevich and John Mearsheimer on Obama’s Legacy is disheartening. Both Bacevich and Mearsheimer are leading foreign policy scholars: Bacevich, a retired Army lieutenant- colonel, has been a trenchant critic of the militarization of American foreign policy, and Mearsheimer is the leading theorist of “realism,” a view that challenges ideological crusading and favors strictly limiting foreign policy goals to the national interest.
From this perspective, a recent interview of Andrew Bacevich and John Mearsheimer on Obama’s Legacy is disheartening. Both Bacevich and Mearsheimer are leading foreign policy scholars: Bacevich, a retired Army lieutenant- colonel, has been a trenchant critic of the militarization of American foreign policy, and Mearsheimer is the leading theorist of “realism,” a view that challenges ideological crusading and favors strictly limiting foreign policy goals to the national interest.
What Trump Could Do
What Trump Could Do
Today Donald Trump becomes the 45th president of the United States. American voters rejected the devil they know so well — Hillary Clinton — for the devil they don’t. Why they did so, and how Trump prevailed, is the biggest political story of our age. But the rejection of progressive hubris, what Friedrich Hayek called the “fatal conceit” of those who would presume to plan our lives, is at the heart of that story.
The Left views Trump’s election as an absolute calamity, despite his support for unions and protectionist trade policies, despite his identity as a New York elite rather than some despised red state politician, and despite his ambivalence toward the social issues that animate Christian conservatives. One would think Democrats would be relieved not to suffer an ideologue like Santorum or Cruz in the White House. Yet their hysteria and lack of self-awareness prompt them to attack the Electoral College, of all things.
The Left views Trump’s election as an absolute calamity, despite his support for unions and protectionist trade policies, despite his identity as a New York elite rather than some despised red state politician, and despite his ambivalence toward the social issues that animate Christian conservatives. One would think Democrats would be relieved not to suffer an ideologue like Santorum or Cruz in the White House. Yet their hysteria and lack of self-awareness prompt them to attack the Electoral College, of all things.
The Bank of England and the ECB Have a Credibility Problem
The Bank of England and the ECB Have a Credibility Problem
For the ECB and Bank of England, already struggling with separate credibility problems discussed below, any such shocks might prove rather welcome. How so, you may ask, given that they lobbied for ‘Remain’ and obviously would have been delighted with Clinton?
Spanish Courts Don’t Have Any Respect for Freedom of Contract
Spanish Courts Don’t Have Any Respect for Freedom of Contract
The Spanish banking sector is getting used to judicial setbacks. Unfortunately, they’re not the sorts of setbacks we’d like to see. This could have been an article on the elimination of the legal privileges — e.g., the existence of a state-owned central bank in charge of bailing out its (equally) irresponsible fellows — that financial businesses are nowadays granted worldwide. Eliminating those privileges would have been a setback for the banking sector, but good for everyone else. Unfortunately, that’s not what’s been happening: no liberalization of that sort whatsoever has taken place.
The DEA: A Good Place to Cut the Federal Budget
With a $29 billion budget for the 2017 fiscal year, the Department of Justice (DOJ) has secured vast resources to the Drug Enforcement Administration (DEA). With a sizeable budget — $2.8 billion in 2015 — the agency tasked with the chore of enforcing “the controlled substances laws and regulations … and [bringing] to the criminal and civil justice system … organizations and principal members of organizations involved in the growing, manufacture, or distribution of controlled substances appearing in or destined for illicit traffic in the United States” has continued to be the number one drug warrior within the federal government. But the DOJ’s Criminal Division, which is tasked with overseeing multiple offices, also houses the Organized Crime and Gang Section (OCGS), an agency that specializes in “developing and implementing strategies to disrupt and dismantle” gangs and organized crime, including drug trafficking. The 2017 budget for the Criminal Division alone is $198.7 million, which represents a “9.3 percent increase over 2016.”
Free Trade versus "Free Trade"
Free Trade versus "Free Trade"
NPR featured an unintentionally funny piece this morning on Donald Trump's views toward the EU and free trade. The guest, former US ambassador to the EU Anthony Gardner, rightfully criticized the president's view that "protection will lead to great prosperity and strength," and called for continued global engagement by US companies and consumers. But he revealed, perhaps inadvertently, what political actors mean by "free trade."
Specifically, Gardner expressed great skepticism towards the prospect of the US striking a bilateral free-trade deal with the UK, supposedly one of Trump's top objectives in his upcoming meeting with new Prime Minister Theresa May. Free-trade agreements are complex, Gardner informed us, and negotiating one will be neither easy nor quick.
Specifically, Gardner expressed great skepticism towards the prospect of the US striking a bilateral free-trade deal with the UK, supposedly one of Trump's top objectives in his upcoming meeting with new Prime Minister Theresa May. Free-trade agreements are complex, Gardner informed us, and negotiating one will be neither easy nor quick.
The Fed Passes the Buck: Blame Oil and China
The Fed Passes the Buck: Blame Oil and China
There are some who, in a complete echo of the news headlines, are quick to point the finger at both oil and China. And yet there are others who point the finger at the Fed for “raising rates too early.” Along with the second is the observation that “inflation is totally MIA” and therefore it was ludicrous that the Fed felt the need to “raise interest rates.” Both of these tend to express anguish over the “strong dollar.”
The Market Doesn't Solve Problems; People Do
The Market Doesn't Solve Problems; People Do
The Cozy Relationship between the Treasury and the Fed
The Cozy Relationship between the Treasury and the Fed
One institution that performed remarkably well in 2015 was the Federal Reserve. It just finished its most profitable year on record. The $100 billion in net income earned last year was a slight improvement over the previous year. That total was also roughly three times higher than the Fed’s income from 2007, the last year before it initiated its Quantitative Easing programs in the wake of the financial crisis.
Three Reasons to Be Worried About the Economy
2016's Economy Begins with a Whimper
2016's Economy Begins with a Whimper
During many Fed tightenings, the stock market and overall economy improved for years afterward because the Fed stimulus had actually brought a temporary form of economic recovery. But rarely, if ever, has the mood turned dark so fast after the Fed officially announced that the recovery is sound and the life support can be removed.
Why I Have Hope
Why I Have Hope
I think the most exciting message for me today is that things are changing.
Often, when I come to these events, people ask me, “isn’t this grueling, isn’t this very tough?” It’s not, though, and it’s actually a little bit selfish on my part, because I get energized when I meet all the young people here. It’s true there is a spread of ages here, but there are a lot of young people and some of them even come up to me and say “you introduced me to these ideas when I was in high school a few years ago.”
Cuba Attacks Christians as Washington Liberalizes Economic Ties
By Doug Bandow
The Obama administration has continued its effort to expand contact between the U.S. and Cuba by easing restrictions on travel, exports, and export financing. Commerce Secretary Penny Pritzker spoke of “building a more open and mutually beneficial relationship.”
However, the administration expressed concern over Havana’s dismal human rights practices. Although Raul Castro’s government has continued economic reforms, it has maintained the Communist Party’s political stranglehold. Indeed, despite the warm reception given Pope Francis last fall, the regime has been on the attack against Cubans of faith.
However, the administration expressed concern over Havana’s dismal human rights practices. Although Raul Castro’s government has continued economic reforms, it has maintained the Communist Party’s political stranglehold. Indeed, despite the warm reception given Pope Francis last fall, the regime has been on the attack against Cubans of faith.
Double Standards for Officialdom
By Richard W. Rahn
A major reason for the growing distrust of government is the double standard whereby government officials and employees often suffer no consequences from incompetence, misbehavior and even criminal violations of the law. In the common law, there is a general principle that if a person is damaged by the actions of others through negligence or illegal behavior, he or she has a right to redress.
Rand Paul Would Have Enlarged GOP Tent
By David Boaz
Sen. Rand Paul’s presidential campaign has ended, like most presidential campaigns, short of the White House. The Republican debate will be poorer without him.
Polls show substantial support for libertarian ideas in the Republican Party. Gallup found that libertarian strength in the GOP had risen from 15% in 2002 to 34% in 2012. In two surveys in 2012 and 2013, David Kirby, then at FreedomWorks, found libertarians were 35% or 41% of the party.
Polls show substantial support for libertarian ideas in the Republican Party. Gallup found that libertarian strength in the GOP had risen from 15% in 2002 to 34% in 2012. In two surveys in 2012 and 2013, David Kirby, then at FreedomWorks, found libertarians were 35% or 41% of the party.
Neighborhood Insecurity: Mexico’’s Resurgent Drug Violence
By Ted Galen Carpenter
Just a few years ago, drug-related violence in Mexico had reached such alarming levels that some experts worried the country was on the brink of becoming a failed state. The decision by President Felipe Calderón (2006-2012) to launch a full-scale military offensive against the drug cartels backfired badly. Violence soared, and in portions of Mexico, one or more drug cartels challenged the legal government for preeminence. By the time Calderón left office, more than 60,000 Mexicans were dead from the fighting and another 25,000 were missing.
Language, Labels and Laws
By Richard W. Rahn
What does a “progressive” stand for? How does this differ from what a liberal, conservative or libertarian stands for? More so than in most years, the presidential candidates are debating about labels. Hillary Clinton and Bernie Sanders got into an argument last week about what a progressive is, and Mrs. Clinton enlightened everyone by telling us “the root of that word, progressive is progress.”
Cruz Makes Play for Libertarian Voters. Is Anybody Game?
By David Boaz
As he moved from evangelical Iowa to fiscally conservative New Hampshire, Sen. Ted Cruz didn’t waste a minute in changing his tune.
In his Iowa victory speech Cruz gave a shout-out to libertarians, who are thick on the ground in New Hampshire. He declared, “That old Reagan coalition is coming back together, … conservatives and evangelicals and libertarian and Reagan Democrats all coming together as one, and that terrifies Washington, D.C.”
Europe, Welfare Migration, and Hypocrisy
By Daniel J. Mitchell
Taxpayers don’t like coughing up big amounts of money so other people can choose not to work. And they really get upset when welfare payments are so generous that newcomers are encouraged to climb in the wagon of government dependency.
This has an effect on the immigration debate in the United States. Most Americans presumably are sympathetic to migrants who will boost per-capita GDP, but there is legitimate concern about those who might become wards of the state.
Welfare migration also has become a big issue in Europe.
Negative Interest Rates Are a Dead End
By William Poole
The Bank of Japan recently announced that it would follow the European Central Bank’s lead and implement a “negative interest rate” policy. Reducing interest rates is supposed to increase spending and investment, spurring growth.
It won’t work. Negative central-bank interest rates will not create growth any more than the Federal Reserve’s near-zero interest rates did in the U.S. And it will divert attention from the structural problems that have plagued growth here, as well as in Europe and Japan, and how these problems can be solved.
It won’t work. Negative central-bank interest rates will not create growth any more than the Federal Reserve’s near-zero interest rates did in the U.S. And it will divert attention from the structural problems that have plagued growth here, as well as in Europe and Japan, and how these problems can be solved.
Is Socialism Making a Comeback?
By Michael D. Tanner
Less than three decades after the fall of the Berlin Wall, socialism seems to be undergoing something of a revival.
A self-professed “democratic socialist” is running for the Democratic presidential nomination, and he is running neck and neck with a party icon. Polls show that more than a quarter of Americans have a favorable opinion of socialism, which might not sound so bad until you learn that that includes 43 percent of those under age 30, and 42 percent of Democrats. Meanwhile, barely half of Americans have a favorable view of capitalism. Democrats, in fact, are as likely to view socialism positively as they are capitalism.
A self-professed “democratic socialist” is running for the Democratic presidential nomination, and he is running neck and neck with a party icon. Polls show that more than a quarter of Americans have a favorable opinion of socialism, which might not sound so bad until you learn that that includes 43 percent of those under age 30, and 42 percent of Democrats. Meanwhile, barely half of Americans have a favorable view of capitalism. Democrats, in fact, are as likely to view socialism positively as they are capitalism.
Wednesday, January 27, 2016
The Simple Solution to America’s Deteriorating Fiscal Outlook
The Simple Solution to America’s Deteriorating Fiscal Outlook
The Congressional Budget Office has just released its new 10-year fiscal forecast and the numbers are getting worse.
Most people are focusing on the fact that the deficit is rising rather than falling and that annual government borrowing will again climb above $1 trillion by 2022.
This isn’t good news, of course, but it’s a mistake to focus on the symptom of red ink rather than the underlying disease of excessive spending.
So here’s the really bad news in the report.
Most people are focusing on the fact that the deficit is rising rather than falling and that annual government borrowing will again climb above $1 trillion by 2022.
This isn’t good news, of course, but it’s a mistake to focus on the symptom of red ink rather than the underlying disease of excessive spending.
So here’s the really bad news in the report.
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