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1. Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change

Author:
Edmund S. Phelps
Publication Date:
02-2015
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
In his most recent tome, Edmund Phelps, the 2006 Nobel Laureate in Economic Science, addresses a topic crucial to successful national capitalist systems: the dynamics of the innovation process. Phelps develops his thesis around three main themes: In part one, he explains the development of the modern economies as they form the core of early—19th century societies in the West; in part two, he explores the lure of socialism and corporatism as competing systems to modern capitalism; and, in part three, he reviews post-1960s evidence of decline in dynamism in Western capitalist countries.
Topic:
Economics
Political Geography:
United States and Europe

2. Anna Jacobson Schwartz: In Memoriam

Author:
George S. Tavlas
Publication Date:
10-2013
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
This issue of the Cato Journal is dedicated to Anna Jacobson Schwartz, who passed away on June 21, 2012, at the age of 96. Anna was an economic historian whose scholarship was marked by, among other things, dedication, tenacity, and perseverance. Her career spanned three quarters of a century. When Anna was about 90, her son Jonathan complained (somewhat tongue-in-check) that he had thought about retiring, but did not feel comfortable doing so while his mother was still working. In 1936, she began collaborating with A. D. Gayer and W. W. Rostow on a study of fluctuations in the British economy between 1790 and 1850. The study was not published until 1953, although most of the work on the study had been completed by the early 1940s. Anna joined the National Bureau of Economic Research in 1941 and remained there for the rest of her life, continuing to go to her office until shortly before her death. She published her first NBER paper in 1947 with Elma Oliver, and her last with Michael Bordo and Owen Humpage in 2012. Her collaboration with Milton Friedman on A Monetary History of the United States, 1867–1960 began in 1948 and was not completed until 1963. The underlying objective of Anna's scholarship throughout her career was to use historical evidence, which she assembled with meticulous attention to accuracy, to understand the workings of the economy better.
Topic:
Economics
Political Geography:
United States

3. The Use of Public Assistance Benefits by Citizens and Non-citizen Immigrants in the United States

Author:
Leighton Ku and Brian Bruen
Publication Date:
02-2013
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
Claims are sometimes made that immigrants use public benefits, such as Medicaid, the Supplemental Nutrition Assistance Program, or the Temporary Assistance for Needy Families programs, more often than those who are born in the United States. This report provides analyses, using the most recent data from the Census Bureau, that counter these claims. In reality, low-income non-citizen immigrants, including adults and children, are generally less likely to receive public benefits than those who are native-born. Moreover, when non-citizen immigrants receive benefits, the value of benefits they receive is usually lower than the value of benefits received by those born in the United States. The combination of lower average utilization and smaller average benefits indicates that the overall cost of public benefits is substantially less for low-income non-citizen immigrants than for comparable native-born adults and children. The report also explains that the lower use of public benefits by non-citizen immigrants is not surprising, since federal rules restrict immigrants' eligibility for these public benefit programs.
Topic:
Economics, Health, Humanitarian Aid, Markets, and Immigration
Political Geography:
United States

4. Why Growth Is Getting Harder

Author:
Brink Lindsey
Publication Date:
10-2013
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
For over a century, the trend line for the long-term growth of the U.S. economy has held remarkably steady. Notwithstanding huge changes over time in economic, social, and political conditions, growth in real gross domestic product (GDP) per capita has fluctuated fairly closely around an average annual rate of approximately 2 percent. Looking ahead, however, there are strong reasons for doubting that this historic norm can be maintained.
Topic:
Economics, Globalization, International Trade and Finance, Markets, Financial Crisis, and Governance
Political Geography:
United States

5. Fiscal and Generational Imbalances and Generational Accounts: A 2012 Update

Author:
Jagadeesh Gokhale
Publication Date:
11-2012
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
Official federal budget accounts are constructed exclusively in terms of current cash flows – receipts from taxes and fees and outlays on purchases and transfers. But cash-flows do not reveal economically relevant information about who benefits and who loses from government policies. Cash flows also do not reveal how changes in government's policies redistribute resources within and across generations, including reducing the tax burden on today's generations and increasing it on future ones. Because most government transact ions are targeted by age and gender, the federal government can bring about large resource transfers across generations. Intergenerational resource transfers will grow larger as the composition of budget receipts and expenditures changes with relatively faster growth of age-and-gender-related social insurance program. Intergenerational redistributions across generations through federal government operations could substantially affect different generations' economic expectations and choices and exert powerful long-term effects on economic outcomes.
Topic:
Economics, Government, Health, Human Welfare, Markets, and Monetary Policy
Political Geography:
United States

6. Central Banks: Reform or Abolish?

Author:
Gerald P. O'Driscoll Jr.
Publication Date:
10-2012
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
Advocates of central bank reform must examine why central banks emerged and what forces sustain them. They did not arise in an institutional vacuum, and will not be reformed in an institutional vacuum. The historical origins of central banks explain how they came into existence. The forces sustaining and feeding their growth may differ from those explaining their origin.
Topic:
Economics, International Trade and Finance, Markets, Monetary Policy, and Governance
Political Geography:
United States

7. The Misuse of Top 1 Percent Income Shares as a Measure of Inequality

Author:
Alan Reynolds
Publication Date:
10-2012
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
This paper confirms recent studies which find little or no sustained increase in the inequality of disposable income for the U.S. population as a whole over the past 20 years, even though estimates of the top 1 percent's share of pretax, pretransfer (market) income spiked upward in 1986-88, 1997-2000 and 2003-2007.
Topic:
Economics, Government, Markets, and Social Stratification
Political Geography:
United States

8. Fixing Mortgage Finance: What to Do with the Federal Housing Administration?

Author:
Mark A. Calabria
Publication Date:
02-2012
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
While Fannie Mae, Freddie Mac, and private subprime lenders have deservedly garnered the bulk of attention and blame for the mortgage crisis, other federal programs also distort our mortgage market and put taxpayers at risk of having to finance massive financial bailouts. The most prominent of these risky agencies is the Federal Housing Administration (FHA).
Topic:
Debt, Economics, Government, and Financial Crisis
Political Geography:
United States

9. Still a Better Deal: Private Investment vs. Social Security

Author:
Michael Tanner
Publication Date:
02-2012
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
Opponents of allowing younger workers to privately invest a portion of their Social Security taxes through personal accounts have long pointed to the supposed riskiness of private investment. The volatility of private capital markets over the past several years, and especially recent declines in the stock market, have seemed to bolster their argument.
Topic:
Economics, International Trade and Finance, Markets, and Financial Crisis
Political Geography:
United States

10. The Economic Benefits of Comprehensive Immigration Reform

Author:
Raúl Hinojosa-Ojeda
Publication Date:
01-2012
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
The U.S. government has attempted for more than two decades to put a stop to unauthorized immigration from and through Mexico by implementing "enforcement-only" measures along the U.S.-Mexico border and at work sites across the country. These measures have failed to end unauthorized immigration and have placed downward pressure on wages in a broad swath of industries.
Topic:
Economics and Immigration
Political Geography:
United States and Mexico

11. The Negative Effects of Minimum Wage Laws

Author:
Mark Wilson
Publication Date:
06-2012
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
The federal government has imposed a minimum wage since 1938, and nearly all the states impose their own minimum wages. These laws prevent employers from paying wages below a mandated level. While the aim is to help workers, decades of economic research show that minimum wages usually end up harming workers and the broader economy. Minimum wages particularly stifle job opportunities for low-skill workers, youth, and minorities, which are the groups that policymakers are often trying to help with these policies.
Topic:
Economics, Labor Issues, and Governance
Political Geography:
United States

12. The Great Streetcar Conspiracy

Author:
Randal O'Toole
Publication Date:
06-2012
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
Streetcars are the latest urban planning fad, stimulated partly by the Obama administration's preference for funding transportation projects that promote "livability" (meaning living without automobiles) rather than mobility or cost-effective transportation. Toward that end, the administration wants to eliminate cost-effectiveness requirements for federal transportation grants, instead allowing non-cost-effective grants for projects promoting so-called livability. In anticipation of this change, numerous cities are preparing to apply for federal funds to build streetcar lines.
Topic:
Economics, Environment, Government, Political Economy, and Infrastructure
Political Geography:
United States

13. Competition in Currency: The Potential for Private Money

Author:
Thomas L. Hogan
Publication Date:
06-2012
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
Privately issued money can benefit consumers in many ways, particularly in the areas of value stability and product variety. Decentralized currency production can benefit consumers by reducing inflation and increasing economic stability. Unlike a central bank, competing private banks must attract customers by providing innovative products, restricting the quantity of notes issued, and limiting the riskiness of their investing activities. Although the Federal Reserve currently has a de facto monopoly on the provision of currency in the United States, this was not always the case. Throughout most of U.S. history, private banks issued their own banknotes as currency. This practice continues today in a few countries and could be reinstituted in the United States with minimal changes to the banking system.
Topic:
Economics, Government, Markets, and Monetary Policy
Political Geography:
United States

14. Questioning Homeownership as a Public Policy Goal

Author:
Morris A. Davis
Publication Date:
05-2012
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
For decades U.S. housing policy has focused on promoting homeownership. In this study, I show that the set of policies designed to further homeownership has been ineffective and expensive and that homeownership as a public policy goal is not well supported.
Topic:
Economics, Government, Markets, and Urbanization
Political Geography:
United States

15. Ending Congestion by Refinancing Highways

Author:
Randal O'Toole
Publication Date:
05-2012
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
Although gasoline taxes have long been the main source of funding for building, maintaining, and operating America's network of highways, roads, and streets, the tax is at best an imperfect user fee. As such, Congress and the states should take action to transition from gas taxes to more efficient vehicle-mile fees.
Topic:
Economics, Government, Communications, and Infrastructure
Political Geography:
United States

16. The American Welfare State: How We Spend Nearly $1 Trillion a Year Fighting Poverty—And Fail

Author:
Michael Tanner
Publication Date:
04-2012
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
News that the poverty rate has risen to 15.1 percent of Americans, the highest level in nearly a decade, has set off a predictable round of calls for increased government spending on social welfare programs. Yet this year the federal government will spend more than $668 billion on at least 126 different programs to fight poverty. And that does not even begin to count welfare spending by state and local governments, which adds $284 billion to that figure. In total, the United States spends nearly $1 trillion every year to fight poverty. That amounts to $20,610 for every poor person in America, or $61,830 per poor family of three.
Topic:
Economics, Government, and Poverty
Political Geography:
United States and America

17. What Made the Financial Crisis Systemic?

Author:
Patric H. Hendershott and Kevin Villani
Publication Date:
03-2012
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
The current narrative regarding the 2008 systemic financial system collapse is that numerous seemingly unrelated events occurred in unregulated or underregulated markets, requiring widespread bailouts of actors across the financial spectrum, from mortgage borrowers to investors in money market funds. The Financial Crisis Inquiry Commission, created by the U.S. Congress to investigate the causes of the crisis, promotes this politically convenient narrative, and the 2010 Dodd-Frank Act operationalizes it by completing the progressive extension of federal protection and regulation of banking and finance that began in the 1930s so that it now covers virtually all financial activities, including hedge funds and proprietary trading. The Dodd-Frank Act further charges the newly created Financial Stability Oversight Council, made up of politicians, bureaucrats, and university professors, with preventing a subsequent systemic crisis.
Topic:
Economics, Government, Markets, Global Recession, and Financial Crisis
Political Geography:
United States

18. Libertarian Roots of the Tea Party

Author:
David Kirby and Emily McClintock Ekins
Publication Date:
08-2012
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
Many people on the left still dismiss the tea party as the same old religious right, but the evidence says they are wrong. The tea party has strong libertarian roots and is a functionally libertarian influence on the Republican Party.
Topic:
Democratization, Economics, Politics, Insurgency, and Financial Crisis
Political Geography:
United States

19. Regulation, Market Structure, and Role of the Credit Rating Agencies

Author:
Mark A. Calabria and Emily McClintock Ekins
Publication Date:
08-2012
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
During the financial crisis of 2008, the financial markets would have been better served if the credit rating agency industry had been more competitive. We present evidence that suggests the Securities and Exchange Commission's designation of Nationally Recognized Statistical Rating Organizations (NRSROs) inadvertently created a de facto oligopoly, which primarily propped up three firms: Moody's, S, and Fitch. We also explain the rationale behind the NRSRO designation given to credit rating agencies (CRAs) and demonstrate that it was not intended to be an oligopolistic mechanism or to reduce investor due diligence, but rather was intended to protect consumers. Although CRAs were indirectly constrained by their reputation among investors, the lack of competition allowed for greater market complacency. Government regulatory use of credit ratings inflated the market demand for NRSRO ratings, despite the decreasing informational value of credit ratings. It is unlikely that this sort of regulatory framework could result in anything except misaligned incentives among economic actors and distorted market information that provides inaccurate signals to investors and other financial actors. Given the importance of our capital infrastructure and the power of credit rating agencies in our financial markets, and despite the good intentions of the uses of the NRSRO designation, it is not worth the cost and should be abolished. Regulators should work to eliminate regulatory reliance on credit ratings for financial safety and soundness. These regulatory reforms will, in turn, reduce CRA oligopolistic power and the artificial demand for their ratings.
Topic:
Economics, Markets, Financial Crisis, and Governance
Political Geography:
United States

20. Corporate Welfare in the Federal Budget

Author:
Tad DeHaven
Publication Date:
07-2012
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
Rising federal spending and huge deficits are pushing the nation toward a financial and economic crisis. Policymakers should find and eliminate wasteful, damaging, and unneeded programs in the federal budget. One good way to save money would be to cut subsidies to businesses. Corporate welfare in the federal budget costs taxpayers almost $100 billion a year.
Topic:
Economics, Markets, Monetary Policy, and Financial Crisis
Political Geography:
United States