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  • Author: Arnold Kling
  • Publication Date: 09-2008
  • Content Type: Policy Brief
  • Institution: The Cato Institute
  • Abstract: The Fannie Mae-Freddie Mac crisis may have been the most avoidable financial crisis in history. Economists have long complained that the risks posed by the government-sponsored enterprises were large relative to any social benefits.
  • Topic: Economics, Government, Financial Crisis
  • Political Geography: United States
  • Author: Randal O'Toole
  • Publication Date: 10-2008
  • Content Type: Policy Brief
  • Institution: The Cato Institute
  • Abstract: Rising gas prices and concerns about greenhouse gases have stimulated calls to build more rail transit lines in urban areas, increase subsidies to Amtrak, and construct a large-scale intercity high-speed rail system. These megaprojects will cost hundreds of billions of dollars, but they won't save energy or significantly reduce greenhouse gas emissions.
  • Topic: Development, Economics, Government
  • Political Geography: United States
  • Author: Michael F. Cannon
  • Publication Date: 10-2008
  • Content Type: Policy Brief
  • Institution: The Cato Institute
  • Abstract: Democratic presidential nominee Sen. Barack Obama (IL) has proposed an ambitious plan to restructure America's health care sector. Rather than engage in a detailed critique of Obama's health care plan, many critics prefer to label it "socialized medicine." Is that a fair description of the Obama plan and similar plans? Over the past year, prominent media outlets and respectable think tanks have investigated that question and come to a unanimous answer: no.
  • Topic: Economics, Government, Health, Markets
  • Political Geography: United States
  • Author: David R. Henderson, Jeffrey Hummel
  • Publication Date: 11-2008
  • Content Type: Policy Brief
  • Institution: The Cato Institute
  • Abstract: Is Alan Greenspan to blame for the current housing bubble and the ongoing financial crisis? A growing chorus charges the former Federal Reserve chairman with being an "inflationist" whose loose monetary policy caused or significantly contributed to our current economic troubles. However, although Greenspan's policies weren't perfect, his monetary policy was in fact tight, and his legacy is one of having overseen low and stable inflation and a striking dampening of the business cycle.
  • Topic: Economics
  • Political Geography: United States
  • Author: Lawrence H. White
  • Publication Date: 11-2008
  • Content Type: Policy Brief
  • Institution: The Cato Institute
  • Abstract: As policymakers confront the ongoing U.S. financial crisis, it is important to take a step back and understand its origins. Those who fault "deregulation," "unfettered capitalism," or "greed" would do well to look instead at flawed institutions and misguided policies. The expansion in risky mortgages to under qualified borrowers was encouraged by the federal government. The growth of "creative" nonprime lending followed Congress's strengthening of the Community Reinvestment Act, the Federal Housing Administration's loosening of down-payment standards, and the Department of Housing and Urban Development's pressuring lenders to extend mortgages to borrowers who previously would not have qualified.
  • Topic: Economics, Government
  • Political Geography: United States
  • Author: Daniel Mitchell
  • Publication Date: 11-2007
  • Content Type: Policy Brief
  • Institution: The Cato Institute
  • Abstract: Some policymakers in the United States and Europe argue that it is possible to enjoy economic growth and also have a large welfare state. These advocates for bigger government claim that the so- called Nordic Model offers the best of both worlds. This claim does not withstand scrutiny. Economic performance in Nordic nations is lagging, and excessive government is the most likely explanation. The public sector in Sweden, Denmark, Norway, Finland, and Iceland consumes, on average, more than 48 percent of economic output. Total government outlays in the United States, by contrast, are less than 37 percent of gross domes- tic product. Revenue comparisons are even more striking. Tax receipts average more than 45 per- cent of GDP in Nordic nations, a full 20 percent- age points higher than the aggregate tax burden in the United States.
  • Topic: Economics, Government
  • Political Geography: United States, Europe
  • Author: Randal O'Tool
  • Publication Date: 10-2007
  • Content Type: Policy Brief
  • Institution: The Cato Institute
  • Abstract: California cities have the least affordable housing and the most congested traffic in the nation. California's housing crisis results directly from several little-known state institutions, including local agency formation commissions (LAFCos), which regulate annexations and the formation of new cities and service districts; the California Environmental Quality Act, which imposes high costs on new developments; and a 1971 state planning law that effectively entitles any resident in the state to a say in how property owners in the state use their land. Cities such as San Jose have manipulated these institutions and laws with the goal of maximizing their tax revenues.
  • Topic: Demographics, Environment, Poverty
  • Political Geography: United States
  • Author: Justin Logan, Ted Carpenter
  • Publication Date: 09-2007
  • Content Type: Policy Brief
  • Institution: The Cato Institute
  • Abstract: Taiwan spends far too little on its own defense, in large part because the Taiwanese believe the United States is their ultimate protector. The Taiwan legislature's six-year delay and severe down- sizing of a budget to pay for weapons systems that Washington has offered the island since 2001 is only one piece of evidence of Taiwan's free riding. Although Taiwan recently approved roughly US$300 million of the original budget of about $18 billion, the underlying problem remains: even with the new appropriation, Taiwan's overall investment in defense—approximately 2.6 percent of GDP—is woefully inadequate, given the ongoing tensions with mainland China. America is now in the unenviable position of having an implicit commitment to defend a fellow democracy that seems largely uninterested in defending itself.
  • Topic: Conflict Prevention, Security, Defense Policy
  • Political Geography: United States, Asia
  • Author: Bryan Caplan
  • Publication Date: 05-2007
  • Content Type: Policy Brief
  • Institution: The Cato Institute
  • Abstract: In theory, democracy is a bulwark against socially harmful policies. In practice, however, democracies frequently adopt and maintain policies that are damaging. How can this paradox be explained? The influence of special interests and voter ignorance are two leading explanations. I offer an alternative story of how and why democracy fails. The central idea is that voters are worse than ignorant; they are, in a word, irrational—and they vote accordingly. Despite their lack of knowledge, voters are not humble agnostics; instead, they confidently embrace a long list of misconceptions.
  • Topic: Civil Society, Democratization, Political Economy
  • Political Geography: United States
  • Author: Will Wilkinson
  • Publication Date: 04-2007
  • Content Type: Policy Brief
  • Institution: The Cato Institute
  • Abstract: “Happiness research” studies the correlates of subjective well-being, generally through survey methods. A number of psychologists and social scientists have drawn upon this work recently to argue that the American model of relatively limited government and a dynamic market economy corrodes happiness, whereas Western European and Scandinavian-style social democracies pro- mote it. This paper argues that happiness research in fact poses no threat to the relatively libertarian ideals embodied in the U.S. socioeconomic system. Happiness research is seriously hampered by confusion and disagreement about the definition of its subject as well as the limitations inherent in current measurement techniques. In its present state happiness research cannot be relied on as an authoritative source for empirical information about happiness, which, in any case, is not a simple empirical phenomenon but a cultural and historical moving target. Yet, even if we accept the data of happiness research at face value, few of the alleged redistributive policy implications actually follow from the evidence. The data show that neither higher rates of government redistribution nor lower levels of income inequality make us happier, whereas high levels of economic freedom and high average incomes are among the strongest correlates of subjective well- being. Even if we table the damning charges of questionable science and bad moral philosophy, the American model still comes off a glowing success in terms of happiness.
  • Topic: Economics, Markets, Political Economy
  • Political Geography: United States, America, Europe