Free Republic

The U.S. is betting that a rich PRC will be democratic. Beijing disagrees. Two bets are on the table. One has been placed by the Washington establishment, the other by the Chinese Communist Party. Analyzing China’s prospects in terms of fashionable globalist ideology, Washington is betting that a rich China will be a free one. The theory is that the only way China can continue to grow is by embracing Western democracy and capitalism. Moreover, the very process of China’s enrichment is supposedly undermining the Beijing government’s authoritarianism. More wealth means more freedom means more wealth. Here is how President...

STOCKHOLM, Sweden, Oct. 9 (UPI) -- U.S. economist Edmund Phelps has been chosen to receive the 2006 Nobel Prize in economics for research on the relationship between employment and inflation. Phelps, 73, will receive the prize, formally known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, and the $1.4 million prize that goes with it Dec. 10 in ceremonies in Sweden. An announcement Monday from the Royal Swedish Academy of Sciences praised Phelps for his work, which showed in the long-run, the rate of unemployment is not affected by inflation. "Phelps showed how the possibilities...

In this column, I'm focusing on bad economics. In fact, I'm going to write about what I consider to be the two worst economic ideas -- or at least ideas that pass as economics, though both have been thoroughly repudiated by nearly all credible thinkers. .... For the sake of political balance, I'll skewer a favorite of the right in this column, and then a favorite of the left in my next piece. The Laffer Curve Economist Arthur Laffer made a very interesting supposition: If tax rates are high enough, then cutting taxes might actually generate more revenue for the...

REYKJAVIK, Iceland. Why is this cold, rainy land with its stark volcanic landscape, without much in the way of natural resources, one of the wealthiest places on Earth? Small states, in the past, were most often poorer on a per capital income basis than large states, but in the last half-century many have become much richer then their large neighbors. Among the wealthiest places on the planet, in addition to the United States, we now find Luxembourg, Hong Kong, Denmark and Ireland, none with many natural resources. In a just-concluded meeting of the Mont Pelerin Society in Iceland, some leaders...

IT is remarkable how Keynesian economic theories from the Great Depression are enjoying something of a vogue in a world that seems to bear little resemblance to the 1930s - at least outside Japan. It reflects an attempt to explain the behaviour of a global economy that has broken away from established economic verities, such as the link between current account deficits, interest rates and exchange rates. For several years now there have been predictions of a crash of the US dollar, a leap in global interest rates, a collapse of asset prices and a possible global recession. Yet global...

Individualism Smith derived his much of his approach to moral questions from his teacher Hutcheson, but he also broke with his mentor on a central point. Hutcheson had grounded the moral sense exclusively on benevolence, which promoted the greatest happiness of the greatest number (He appears to have been the first to formulate the utilitarian calculus), and he regarded self-love or, as we should say now, concern for self interest or self esteem as contaminating any virtuous motive. Smith, by contrast, thought this left too little room for the power of self-love: “Regard to our own private happiness and...

The other night a local talk-radio host, usually a polite conservative, was discussing whether American corporations should be allowed to "outsource" jobs. But his good manners deserted him when a caller said, "As the nineteenth-century economist Frederic Bastiat said, --" The host cut him off right there: "I don't want to hear some eighteenth-century [sic] economic theory." He immediately went on to the next caller. I was shocked. A conservative who'd never heard of Bastiat? Didn't even know what century he'd lived in?

Richard Parker's February 6th Boston Globe article "The Pragmatist and the Utopian" is an interesting comparison between legendary economists John Kenneth Galbraith and Milton Friedman. In the article, Parker gives a long history of what he sees as the relationship between Friedman, his ideas and the conservative wing of the Republican Party. (To be fair, it's not clear whether the article's claims come directly from Parker, or from conversation(s) with Galbraith that are then related in the article). According to his reading of history, Parker wants his readers to believe that Friedman is a dangerous utopian, while Galbraith is a...

Not long ago, Republicans were trying to pass a balanced budget amendment to the Constitution. Their worry was that large deficits would hamper growth and prosperity. At the same time, Alan Greenspan, Chairman of the Federal Reserve, preached deficit reduction too. He saw it as the solution not only to the country’s economic downturn, but also to its more long-term economic problems. Meanwhile, Democrats were skeptical. They believed that deficit spending had brought the country out of the Great Depression, and Democratic economists were overwhelming Keynesians. As such, they feared that raising taxes and lowering government expenditures to try to...

When I was house-hunting, one of the things that struck me about the house that I eventually settled on was the fact that there were no curtains or shades on the bathroom window in the back. The reason was that there was no one living on the steep hillside in back, which was covered with trees. Since I don't own that hillside, someday someone may decide to build houses there, which means that the bathroom would then require curtains or shades and our back porch would no longer be as private. Fortunately for me, local restrictive laws currently prevent houses...

Bush Plan Could Imperil Tax Write-Off for New York By IAN URBINA December 27, 2004 As the Bush administration looks to revamp the tax code, New York officials say they are particularly worried about one idea being considered: eliminating the federal deduction for state and local taxes. If the president pursues this plan, New York State would lose about $37 billion per year in federal tax deductions, more than almost any other state, according to Internal Revenue Service data. The change would affect about 3.2 million households in New York, three-quarters of which are middle- and low-income, tax records indicate....

This is Mises's 1927 review of J. M. Keynes, The End of Laissez-Faire, Ideas on the Unification of Private and Social Economy (Munich and Leipzig: Duncker and Humblot, 1926), 40 pages, translated for the first time here (by Joseph Stromberg). It originally appeared as Mises, "Das Ende des Laissez-Faire, Ideen zur Verbindung von Privat- und Gemeinwirtschaft". Zeitschrift für die gesamte Staatswissenschaft. 82(1927) 190-91. A review of a lecture given by John M. Keynes in Berlin. This text reproduces an address given by the English economist John Maynard Keynes on June 23, 1926, at the University of Berlin. It makes a...

The Successor to Greenspan Has a Very Tough Act to Follow WHEN Alan Greenspan finally retires from the Federal Reserve, will he leave behind any of his DNA? Now in his 18th remarkable year as Fed chairman, the owlish and idiosyncratic Mr. Greenspan is required by law to step down in January 2006. Nominating a successor could be President Bush's biggest economic decision next year, given Mr. Greenspan's mythic reputation as the guardian of price stability and economic growth. A big uncertainty is how any successor will extend Mr. Greenspan's approach to monetary policy, which has been as much an...

President Bush plans to overhaul his economic team for the second time in two years and wants to tap prominent figures outside the administration to help sell rewrites of Social Security and the tax laws to Congress and the country, White House aides and advisers said over the weekend. The aides said the replacement of four of the five top economic officials -- including the Treasury and Commerce secretaries, with only budget director Joshua B. Bolten likely to remain -- is part of Bush's preparation for sending Congress an ambitious second-term domestic agenda.

The Dallas Fed has an active economic education program, focusing on high school teachers of economics. Whenever I address a group of teachers, I invariably find myself extolling the virtues of Frédéric Bastiat as the greatest economic educator of all time. I tell them that if Bastiat isn't their patron saint, he should be. To increase familiarity with Bastiat, I asked my colleague, Bob Formaini, to write this short primer. — Bob McTeer President and Chief Executive Officer Federal Reserve Bank of Dallas Frédéric Bastiat: World-Class Economic EducatorCurrent policy debates are, with few exceptions, echoes of past intellectual disagreements....

The money quotes: The possibility that Paul Sweezy would one day be recognized as America's leading radical economist seemed unlikely early in his life: His father was a Wall Street investment banker whose income afforded Sweezy a privileged education at such bastions of the ruling class as Philips Exeter Academy and Harvard University. But his family wealth, he would later acknowledge, was what gave him the freedom to spurn capitalism and carve a path to its polar opposite...He had a home in Larchmont, within commuting distance of Monthly Review's Manhattan offices, as well as a 25-acre farm in New Hampshire...

You have surely played the Parker Brother's board game Monopoly. It has been published in 26 languages and in 80 countries around the world. Since being introduced in 1935, in fact, an estimated one-half billion people have played it. It has taught the multitudes what they know about how an economy works. The problem is that the game seriously misrepresents how an actual market economy operates. To review, in the free market, Mises wrote, Neither the entrepreneurs nor the farmers nor the capitalists determine what has to be produced. The consumers do that. . . . Their buying and their...

VANCOUVER • Findings in a new Phaser Institute study suggest it might be time to stop feeling sorry for the poor and start getting angry at them. The report claims that the underclass are not only responsible for creating the country's crushing debt, they are also dragging down the average standard of living of each and every Canadian. Institute director Michael (Sky) Walker stated, "Our sophistic macro-economic research shows that if poor people were rich, they would contribute more to national economic output and increase government revenues." The result would be a substantially higher federal revenues without the need to...

Inequity: Is it a sin? The rich-poor gap in the United States has doubled in 21 years and is set to widen further under new tax cuts. People of faith say society has a moral responsibility to narrow that gap. America is changing: The society that has prided itself on being an egalitarian model for the world has become more unequal than "aristocratic" Europe, economists confirm. The rich-poor gap has doubled in 21 years and now is at its widest since 1929. The number of those in poverty rose by 1.7 million between 2001 and 2002. New tax cuts will...

The Great Depression remains the central economic event in American history. Even today, politicians invoke its memory. For example, Democrats routinely accuse George W. Bush of having economic policies like those of Herbert Hoover, on whose watch the depression began. Given its horrendous effects, accusing anyone of threatening a replay is about as nasty a charge that can be made in politics. For Democrats, the story line is pretty simple. Republican policies in the 1920s brought on the depression and those of Franklin D. Roosevelt ended it. The former promoted tax cuts and laissez-faire economic policies; the latter raised taxes...

Populism vs. Economics By Arnold Kling "Each of the four schools that together represent the American foreign policy debate makes distinct contributions to national power, and each is well matched with the others -- capable of complementing one another and of flexibly combining in many ways to meet changing circumstances." -- Walter Russell Mead Historian Walter Russell Mead's Special Providence: American Foreign Policy and How it Changed the World is among the most stimulating books in recent years. Although it is focused on American approaches to foreign policy, the off-hand insights that Mead offers about attitudes toward economic issues are...

Mon October 13, 2003 08:14 AM ET By Pedro Nicolaci da Costa NEW YORK (Reuters) - Nobel-winning economist Joseph Stiglitz is best known for his scathing critique of globalization's effect on the world's poor, but now he has turned his ire on an unlikely new target -- himself. Last year, Stiglitz's book "Globalization and its Discontents" took aim at the World Bank and International Monetary Fund's policies, making him something of a celebrity economist in places like Latin America. But some in Washington complained that he accepted too little blame for how the bank's policies were shaped when he served...

BALTIMORE -- If I am to believe the media, President George W. Bush's policies have engineered a complete economic meltdown and put us in the worst fiscal condition since the Great Depression. When I hear this I typically ignore it. As an economics major, I know how to read through nonsense. Recently, however, it has come to my attention that many economists themselves have entered into this silliness. Recently, the think tank EPI circled a petition opposing the Bush tax cut that was signed by over 500 economists, including several Nobel laureates. What struck me as odd was not that...

Memo To: Website Fans, Browsers Clients From: Jude Wanniski Re: Part I Today I’m posting the first of a two-part brief history of the Supply-Side Revolution, written by a distinguished Los Angeles attorney, Wayne Jett, a 60-year-old man I’ve never met. He clearly has gone to a great deal of trouble to assemble this account, which he first sent to Professor Robert Mundell of Columbia University – Mundell being the prime mover in reviving classical theory. When Mundell gave it his seal of approval, Mr. Jett sent it to me, wondering if I could suggest a place where it might...

CULTURAL AND MORAL ECONOMY: THE DIFFERENT APPROACHES TO CULTURE AND ECONOMY - A CRITIQUE OF ‘CULTURAL ECONOMY’ AND TOWARDS ‘MORAL ECONOMY’We can identify the key features of the traditional approaches to culture and economy. Table 1 highlights the strengths and weaknesses of economic liberalism and (Marxist) political economy. Furthermore, we can observe the ways in which cultural economy differs from these traditional perspectives (see Table 2). Indeed, the cultural economy framework has several distinct advantages over them (see Table 3). Yet, nevertheless, there are particular difficulties within the cultural economy perspective, and we shall examine some of its internal weaknesses....

Keynesian Economics I realize that these words are like waving a red flag in front of conservatives, but I don’t understand why. When I took economics in college over 30 years ago, it was explained that John Maynard Keynes thought the government should run a surplus in good times (underspend) rather than lower taxes or increase services. He also thought that the government should use that surplus in bad times (overspend) rather than cut services or raise taxes. That makes a lot of sense to me. It sounds like how I try to run my household. I realize that politicians...

Some of my Christian friends are suspicious of my interest in economics. They see economics as a product of Enlightenment rationalism, along with deism, atheism, the chaos of the French Revolution and other un-Christian aspects of the modern age. So I am greatly pleased to be able to direct them to the just reissued edition of Alejandro A. Chafuen's Faith and Liberty: The Economic Thought of the Late Scholastics, (formerly titled "Christians for Freedom"). This short book deals exclusively with the pre-Enlightenment Scholastics, who were primarily members of religious orders in Spain. These men built on the work of Thomas...

Economic Theory and Distributism "Big Business and State Socialism are very much alike, especially Big Business." - G.K.'s Weekly, 4/10/26 "[No society can survive the socialist] fallacy that there is an absolutely unlimited number of inspired officials and an absolutely unlimited amount of money to pay them." - The Debate with Bertrand Russell, BBC Magazine, 11/27/35 "A citizen can hardly distinguish between a tax and a fine, except that the fine is generally much lighter." - ILN, 5/25/31 "Too much capitalism does not mean too many capitalists, but too few capitalists." - The Uses of Diversity, 1921 "Price is a...