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1. The National Flood Insurance Program: Solving Congress’s Samaritan’s Dilemma

Author:
Peter Van Doren
Publication Date:
03-2022
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Who should pay for the damages caused by natural disaster? The American ethos has long called on personal responsibility and private charity, rather than broad public aid, to secure people’s welfare. Although public emergency services play a vital role during and immediately after a catastrophe, this ethos looks to private insurance and disaster‐​oriented organizations, such as the Red Cross, to be the main modes of recovery from a flood or storm, as well as prior care in siting and constructing buildings to blunt the effects of wind and rain.
Topic:
Government, Natural Disasters, Public Policy, and Insurance
Political Geography:
North America and United States of America

2. When Is Tinkering with Safety Net Programs Harmful to Beneficiaries?

Author:
Jeffrey Clemens and Michael J. Wither
Publication Date:
03-2022
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
The U.S. safety net has many moving parts. Redistributive transfers are made in cash and in kind, often come through regulation, and are implemented by multiple levels of government. Arrangements related to health care and health insurance are particularly complicated, as low‐​income households must navigate eligibility for free care, Medicaid, subsidized coverage, and employer‐​provided coverage.
Topic:
Government, Economic Policy, Labor Market, and Safety Net
Political Geography:
North America and United States of America

3. Slippery Fish: Enforcing Regulation under Subversive Adaptation

Author:
Andres Gonzalez-Lira
Publication Date:
04-2022
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Correcting market failures and improving economic efficiency often require curbing undesirable behaviors of market agents who act to maximize their private benefits. Examples include actions that affect ecosystems, such as deforestation, pollution, and overexploitation of natural resources; actions that affect community health, such as drunk driving and open defecation; or actions that undermine government performance, such as corruption and tax evasion. Enacting and enforcing regulations is the most direct strategy to deter such behaviors. Implementing this strategy requires strong institutions to enforce laws, plus sophisticated policing to track agents’ reactions to enforcement so that rules are robust enough to curb the undesirable behavior even when regulated agents try to game the new system.
Topic:
Environment, Government, Markets, Regulation, and Adaptation
Political Geography:
Global Focus

4. Jawboning against Speech: How Government Bullying Shapes the Rules of Social Media

Author:
Will Duffield
Publication Date:
09-2022
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Over the past two decades, social media has drastically reduced the cost of speaking, allowing users the world over to publish with the push of a button. This amazing capability is limited by the fact that speakers do not own the platforms they increasingly rely on. If access to the platforms is withdrawn, speakers lose the reach that social media grants. In America, government censorship is limited by the First Amendment. Nevertheless, seizing upon the relationship between platforms and speakers, government officials increasingly demand that platforms refrain from publishing disfavored speech. They threaten platforms with punitive legislation, antitrust investigations, and prosecution. Government officials can use informal pressure — bullying, threatening, and cajoling — to sway the decisions of private platforms and limit the publication of disfavored speech. The use of this informal pressure, known as jawboning, is growing. Left unchecked, it threatens to become normalized as an extraconstitutional method of speech regulation. While courts have censured jawboning in other contexts, existing judicial remedies struggle to address social media jawboning. Amid the opacity and scale of social media moderation, government influence is difficult to detect or prevent. Ultimately, congressional rulemaking and the people’s selection of liberal, temperate officials remain the only reliable checks on this novel threat to free speech.
Topic:
Government, Regulation, Social Media, Censorship, and Free Speech
Political Geography:
Global Focus and United States of America

5. The Potential for Constitutional Devolution in South Africa

Author:
Martin van Staden
Publication Date:
10-2021
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
The African National Congress (ANC) today rules South Africa, formally a federation, as though it were a unitary state. There has been increasing agitation in recent years for the secession of the Western Cape province, which since South Africa ended apartheid in 1994 has never returned a majority vote in favor of the ANC.
Topic:
Government, Constitution, Disputes, and African National Congress (ANC)
Political Geography:
Africa and South Africa

6. A Brief History of U.S. Immigration Policy from the Colonial Period to the Present Day

Author:
Andrew M. Baxter and Alex Nowrasteh
Publication Date:
08-2021
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
More than 86 million people have legally immigrated to the United States between 1783 and 2019. The legal regime under which they immigrated has changed radically over that time; the politics surrounding those changes have remained contentious, and past immigration policies inform the current political debate. Conflicting visions and piecemeal legislation have left the United States with an archaic and barely coherent immigration system with outdated policy objectives that is primarily controlled by the executive branch of government. We review the history of U.S. immigration policy, including the legal controversies that empowered Congress with its immigration plenary power and the historical policy decisions that still guide the U.S. immigration system, in order to contextualize the current political debate over immigration at the beginning of the Biden administration.
Topic:
Government, History, Immigration, and Immigration Policy
Political Geography:
North America and United States of America

7. Industrial Policy Implementation: Empirical Evidence from China’s Shipbuilding Industry

Author:
Panle Barwick, Myrto Kalouptsidi, and Nahim Bin Zahur
Publication Date:
08-2021
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Industrial policy has been widely used in developed and developing countries. Examples include the United States and Europe after World War II; Japan in the 1950s and 1960s; South Korea and Taiwan in the 1960s and 1970s; and Brazil, China, India, and other developing countries more recently. Industrial policies are now back in the spotlight in developed countries, such as Europe and the United States. Designing and implementing industrial policies is a complicated task. Governments seeking to promote the growth of selected sectors have a wide range of policy tools at their disposal, including subsidies on output, provisioning loans at below‐​market interest rates, preferential tax policies, tariff and nontariff barriers, and so on. They must also choose the timing of policy interventions and whether to target selected firms within an industry.
Topic:
Government, Industrial Policy, Economic Policy, and Shipbuilding
Political Geography:
China and Asia

8. The Intended and Unintended Consequences of Disposable Bag Regulation

Author:
Tatiana Homonoff, Lee-Sien Kao, Javiera Selman, and Christina Seybolt
Publication Date:
11-2021
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Many recent government and corporate policies aimed at reducing a variety of negative externalities include regulations that ban the provision of externality‐​generating products. However, these policies often ban only a narrow subset of products associated with the underlying externality. For example, the U.S. Department of Justice banned bump stocks, which assist in rapid‐​fire shooting, after a Las Vegas mass shooting rather than placing stricter regulations on all assault weapons. Similarly, Starbucks recently banned the distribution of plastic straws at its stores to reduce environmental waste, and New York City attempted to pass a restaurant ban on sugar‐​sweetened beverages over 16 ounces to curb obesity.
Topic:
Environment, Government, Regulation, and Corporations
Political Geography:
Global Focus

9. How Misaligned Incentives Hinder Foster Care Adoption

Author:
Isabella M. Pesavento
Publication Date:
01-2021
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Adoption, particularly adoption out of foster care, has not been well studied within the field of economics. Researchers may avoid this topic because the adoption market greatly deviates from a typical market, and the system and data collection are highly fragmented, with relatively little federal coordination. Rubin et al. (2007) and Thornberry et al. (1999) show that instability in foster care placements produces negative welfare outcomes, and Hansen (2006), Barth et al. (2006), and Zill (2011) demonstrate that adoption out of foster care is socially and financially beneficial. Yet, children waiting to be adopted out of foster care are in excess supply, which has been exacerbated in recent years. I hypothesize that this is, in part, due to misaligned incentives of government officials and the contracted foster care agencies. I show that earnings are prioritized over ensuring permanent child placement, which hinders the potential for adoption, and government oversight fails to correct such iniquities because of career interests.
Topic:
Economics, Government, Markets, Children, Incentives, Foster Care, and Adoption
Political Geography:
North America and United States of America

10. A Reckoning Looms for America’s 50‐​Year Financial Surveillance System

Author:
Michael J. Casey
Publication Date:
06-2021
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
For all the upheaval of 2020, it’s perhaps not surprising that the 50‐​year anniversary of a major piece of financial legislation came and went with little fanfare. But the 1970 U.S. Bank Secrecy Act (BSA) deserves much scrutiny.1 In mandating that financial institutions maintain customer identity records and report illicit activity to government agencies, the BSA was a landmark statute by any measure. It paved the way to an ever‐​expanding system of international surveillance that’s a cornerstone of U.S. economic power.
Topic:
Economics, Government, Finance, and Surveillance
Political Geography:
North America and United States of America

11. Questioning Industrial Policy: Why Government Manufacturing Plans Are Ineffective and Unnecessary

Author:
Scott Lincicome and Huan Zhu
Publication Date:
06-2021
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
In the wake of the COVID-19 pandemic and rising U.S.-China tensions, American policymakers have again embraced “industrial policy.” Both President Biden and his predecessor, as well as legislators from both parties, have advocated a range of federal support for American manufacturers to fix perceived weaknesses in the U.S. economy and to counter China’s growing economic clout. These and other industrial policy advocates, however, routinely leave unanswered important questions about U.S. industrial policy’s efficacy and necessity: What is “Industrial Policy”? Advocates of “industrial policy” often fail to define the term, thus permitting them to ignore past failures and embrace false successes while preventing a legitimate assessment of industrial policies’ costs and benefits. Yet U.S. industrial policy’s history of debate and implementation establishes several requisite elements – elements that reveal most “industrial policy successes” not to be “industrial policy” at all. What are the common obstacles to effective U.S. industrial policy? Several obstacles have prevented U.S. industrial policies from generating better outcomes than the market. This includes legislators’ and bureaucrats’ inability to “pick winners” and efficiently allocate public resources (Hayek’s “Knowledge Problem”); factors inherent in the U.S. political system (Public Choice Theory); lack of discipline regarding scope, duration, and budgetary costs; interaction with other government policies that distort the market at issue; and substantial unseen costs. What “problem” will industrial policy solve? The most common problems purportedly solved by industrial policy proposals are less serious than advocates claim or unfixable via industrial policy. This includes allegations of widespread U.S. “deindustrialization” and a broader decline in American innovation; the disappearance of “good jobs”; the erosion of middle‐​class living standards; and the destruction of American communities. Do other countries’ industrial policies demand U.S. industrial policy? The experiences of other countries generally cannot justify U.S. industrial policy because countries have different economic and political systems. Regardless, industrial policy successes abroad – for example, in Japan, Korea and Taiwan – are exaggerated. Also, China’s economic growth and industrial policies do not justify similar U.S. policies, considering the market‐​based reasons for China’s rise, the Chinese policies’ immense costs, and the systemic challenges that could derail China’s future growth and geopolitical influence. These answers argue strongly against a new U.S. embrace of industrial policy. The United States undoubtedly faces economic and geopolitical challenges, including ones related to China, but the solution lies not in copying China’s top‐​down economic planning. Reality, in fact, argues much the opposite.
Topic:
Government, Industrial Policy, Manufacturing, and COVID-19
Political Geography:
China, Asia, North America, and United States of America

12. China: Rise or Demise?

Author:
John Mueller
Publication Date:
05-2021
Content Type:
Commentary and Analysis
Institution:
The Cato Institute
Abstract:
China, even if it rises, does not present much of a security threat to the United States. Policymakers increasingly view China’s rapidly growing wealth as a threat. China currently ranks second, or perhaps even first, in the world in gross domestic product (although 78th in per capita GDP), and the fear is that China will acquire military prowess commensurate with its wealth and feel impelled to carry out undesirable military adventures. However, even if it continues to rise, China does not present much of a security threat to the United States. China does not harbor Hitler‐​style ambitions of extensive conquest, and the Chinese government depends on the world economy for development and the consequent acquiescence of the Chinese people. Armed conflict would be extremely—even overwhelmingly—costly to the country and, in particular, to the regime in charge. Indeed, there is a danger of making China into a threat by treating it as such and by engaging in so‐​called balancing efforts against it. Rather than rising to anything that could be conceived to be “dominance,” China could decline into substantial economic stagnation. It faces many problems, including endemic (and perhaps intractable) corruption, environmental devastation, slowing growth, a rapidly aging population, enormous overproduction, increasing debt, and restive minorities in its west and in Hong Kong. At a time when it should be liberalizing its economy, Xi Jinping’s China increasingly restricts speech and privileges control by the antiquated and kleptocratic Communist Party over economic growth. And entrenched elites are well placed to block reform. That said, China’s standard of living is now the highest in its history, and it’s very easy to envision conditions that are a great deal worse than life under a stable, if increasingly authoritarian, kleptocracy. As a result, the Chinese people may be willing to ride with, and ride out, economic stagnation should that come about—although this might be accompanied by increasing dismay and disgruntlement. In either case—rise or demise—there is little the United States or other countries can or should do to affect China’s economically foolish authoritarian drive except to issue declarations of disapproval and to deal more warily. As former ambassador Chas Freeman puts it, “There is no military answer to a grand strategy built on a non‐​violent expansion of commerce and navigation.” And Chinese leaders have plenty of problems to consume their attention. They scarcely need war or foreign military adventurism to enhance the mix. The problem is not so much that China is a threat but that it is deeply insecure. Policies of threat, balance, sanction, boycott, and critique are more likely to reinforce that condition than change it. The alternative is to wait, and to profit from China’s economic size to the degree possible, until someday China feels secure enough to reform itself.
Topic:
Government, GDP, Geopolitics, and Economic Growth
Political Geography:
China, Asia, and United States of America

13. An Analysis of the PBOC’s New Mobile Payment Regulation

Author:
Andrew Liu
Publication Date:
01-2019
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
In 2016 alone, China saw $9 trillion in mobile payments—in contrast to a comparably small $112 billion of mobile payments in the United States (Abkowitz 2018). The use of mobile payment systems such as Alipay and WeChat Pay are widespread in China, with users ranging from beggars to lenders to criminals. Previously, the mobile payments landscape was largely untouched and unregulated by the Chinese government because of its relative insignificance in the Chinese economy. However, with the explosive growth in mobile payment transactions, the People’s Bank of China (PBOC) implemented a new mobile payment regulation on June 30, 2018. Most notably, the government will require all mobile payments to be cleared through the PBOC, and hence, all mobile payment transactions will begin to touch the hands of the Chinese Communist Party (CCP) (Hersey 2017). The PBOC’s stated reasoning for implementing this regulation is to curb money laundering and fraud. While those are valid concerns, it is unlikely that there are not additional motivations for the new regulation. In this article, I analyze the effects this new regulation has had and will likely have on the various mobile payment system stakeholders, competitors, and users, and also uncover what underlying motives the PBOC has in implementing the regulation.
Topic:
Government, Regulation, Economy, Banks, and Chinese Communist Party (CCP)
Political Geography:
China and Asia

14. Subnational Economic Freedom and Performance in the United States and Canada

Author:
Daniel L. Bennett
Publication Date:
01-2016
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
During his illustrious career spanning more than half a century, Richard Vedder has tirelessly advocated for limited government and free enterprise. Much of his scholarship has focused on examining how fiscal and labor market policies consistent with the principles of economic freedom are associated with economic and social benefits such as stronger economic performance (Vedder 1981, 1990), lower unemployment (Vedder and Gallaway 1996, 1997), and poverty alleviation (Vedder and Gallaway 2002). Vedder has also examined the impact of government policy on income inequality (Vedder 2006; Vedder and Gallaway 1986, 1999; Vedder, Gallaway, and Sollars 1988), an area that he and I have collaborated to study (Bennett and Vedder 2013, 2015). Thus, Vedder’s scholarship has contributed to our understanding of the impact that economic freedom exerts on economic outcomes.
Topic:
Government, Income Inequality, Economy, and Free Trade
Political Geography:
Canada, North America, and United States of America

15. Income Inequality: Piketty and the Neo-Marxist Revival

Author:
Thomas H. Mayor
Publication Date:
02-2015
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Karl Marx formulated his ideas in the middle of the 19th century when much of Europe, particularly England, was well along in what is often referred to as the Industrial Revolution. The central Marxist idea was that those who had wealth would reap the benefit of this revolution and become ever more wealthy while those who lived from their labor alone would be relegated to a bare subsistence. In his view, capital accumulation and increases in productivity do not benefit those who work for a living. Allegedly, those who own the means of production (wealth) and supposedly perform no work, receive all the benefits.
Topic:
Government
Political Geography:
Europe and England

16. Welfare Economics and Second-Best Theory: Filling Imaginary Economic Boxes

Author:
Richard E. Wagner
Publication Date:
02-2015
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Since the beginnings of the efforts of economist to give their discipline scientific grounding, economists have thought their theoretical efforts had relevance for addressing significant public issues. While the classical economists generally supported what Adam Smith described as the “system of natural liberty,” those economists also weighed in on numerous issues of public discussion. The tenor and substance of those efforts is set forth wonderfully by Lion Robbins (1952) and Warren Samuels (1966). While the analytical default setting of those economists was to support the system of natural liberty, they also recognized the value of sound public policy in supporting that stem. The classical economists thought that there could be publicly beneficial activities that the system. The classical economists thought that there could be publicly beneficial activities that the system of natural liberty would be unlikely to do well in providing. They also thought that there were activities provided through commercial transactions that could wreak significant effects on bystanders to those transactions. The amount of education acquired within a society was one such candidate (West 1965), with the care of the poor being another (Himmelfarb 1983). IN such matters as these, the classical economists engaged in strenuous debate and discussion that served as a forerunner to the development of welfare economics during the 20th century.
Topic:
Government

17. The Rule of Nobody: Saving America from Dead Laws and Broken Government

Author:
Philip K. Howard
Publication Date:
02-2015
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Phillip Howard is a lawyer nationally known for his best-selling books and extensive commentary on the dysfunctions of the American legal and political systems and the adverse effects those dysfunctions have on individual behavior and the overall workings of society.
Topic:
Government
Political Geography:
America

18. Falling Behind? Boom, Bust, and the Global Race for Scientific Talent

Author:
Michael Teitelbaum
Publication Date:
02-2015
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
In Washington, doomsday prophets tend to be effective motivational speakers. They successfully persuade the electorate that their cause is worthy and prompt Congress to take action. In his book Falling Behind? Boom, Bust, and the Global Race for Scientific Talent, Michael Teitelbaum takes on a particular brand of doomsday prophet: those who see impending shortages in the science and engineering workforce. Teitelbaum walks his readers through five postwar cycles of boom and bust in the science and engineering workforce, which eh argues have been driven to a large extend by political machinations set in motion by labor shortage claims (claims that have been almost universally rejected by economists studying the issue). The institutions that currently shape the science and engineering workforce are largely the product of policy responses to these booms and busts. As a result, Falling Behind? Is more than just a work of policy history. It is also a cogent analysis of contemporary R funding mechanisms, high-skill immigration policies, and PhD program structures.
Topic:
Government
Political Geography:
Washington and Soviet Union

19. Saving Congress from Itself: Emancipating the States Empowering Their People

Author:
James L. Buckley
Publication Date:
02-2015
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
“The United States faces two major problems today,” writes James L. Buckley: “runaway spending that threatens to bankrupt us and a Congress that appears unable to deal with long-term problems of any consequence.” Contributing significantly to both, he argues, are the more than 1,100 federal grants-in-aid programs Congress has enacted—federal grants to state and local governments, constituting 17 percent of the federal budget, the third-largest spending category after entitlements and defense, with costs that have risen from $24.1 billion in 1970 to $640.8 billion in fiscal 2015. His “modest proposal”? Do away with them entirely, thereby saving Congress from itself while emancipating the states and empowering their people. If that sounds like a program for revising constitutional federalism, it is.
Topic:
Government
Political Geography:
United States

20. Boom Towns: Restoring the Urban American Dream

Author:
Stephen J. K. Walters
Publication Date:
02-2015
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
The image of a boom town is commonly used to describe exceptional conditions through which a village suddenly becomes a city. Often such conditions are the discovery of mineral deposits that attracts industry and commerce. While in their booming condition, such towns are oases of societal flourishing relative to their preceding state. In Boom Towns, Stephen J.K. Walters, a professor of economics at Loyola University in Baltimore, explains that cities in general have the capacity perpetually to b forms of boom towns. Cities can serve as magnets to attract people and capital, thus promoting the human flourishing that has always been associated with cities at their best. It is different if cities are at their worst, as Walters explains in brining Jane Jacobs's Death and Life of Great American Cities into explanatory ambit. There are no natural obstacles to cities occupying the foreground of societal flourishing. There are obstacles to be sure, but these are man-made. Being man-made, they can also be overcome through human action, at least in principle even if doing so in practice might be difficult.
Topic:
Government
Political Geography:
America

21. Is the Government Buying Science or Support? A Framework Analysis of Federal Funding-induced Biases

Author:
Patrick J. Michaels and David E. Wojick
Publication Date:
04-2015
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
The purpose of this report is to provide a framework for doing research on the problem of bias in science, especially bias induced by Federal funding of research. In recent years the issue of bias in science has come under increasing scrutiny, including within the scientific community. Much of this scrutiny is focused on the potential for bias induced by the commercial funding of research. However, relatively little attention has been given to the potential role of Federal funding in fostering bias. The research question is clear: does biased funding skew research in a preferred direction, one that supports an agency mission, policy or paradigm? Federal agencies spend many billion dollars a year on scientific research. Most of this is directly tied to the funding agency mission and existing policies. The issue is whether these financial ties lead to bias in favor of the existing policies, as well as to promoting new policies. Is the government buying science or support?
Topic:
Government

22. Fatalistically Flawed: A Review Essay on Fragile

Author:
George Selgin
Publication Date:
03-2015
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
Not long ago a colleague of mine, who works regularly with legislators, attended a conference at which the lunch speaker, a famous economist, began by telling everyone why governments regulate financial institutions. The reasons the economist gave consisted of various (supposed) financial-market failures. Said the colleague to me later: “I just wanted to stand up and shout, 'That's got nothing to do with it!'” I relate this because some readers may otherwise fail to appreciate the importance of a work whose chief revelation is that financial legislation — and consequently the general structure of financial systems — are shaped by politics. My colleague didn't need to be told, but others, including many economists, evidently do. In Fragile by Design: The Political Origins of Banking Crises Scarce Credit, Charles Calomiris and Stephen Haber tell them. Banking arrangements, they argue, are “not a passive response to some efficiency criterion but rather the product of political deals that determine which laws are passed” (pp. 13 and 38). What's more, the laws such deals give rise to are, more often than not, detrimental to bank safety and soundness. In few words, banking instability has its roots, not in any fragility inherent to commercial banking, but in deals struck between governments and various interest groups. Fragile by Design is at once an alternative interpretation of the history of banking and a contribution to the debate on the causes of the recent crisis. Though other reviewers have tended to focus their attention on the latter contribution, many of Fragile by Design's most important insights, as well as many of its more serious flaws, are independent of its take on the subprime crisis. It is to those insights and flaws that I wish to draw attention
Topic:
Government

23. Forecast Bias of Government Agencies

Author:
Robert Krol
Publication Date:
03-2014
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Forecasts of future economic activity underlie any budget revenue projection. However, the forecasters in a government agency may face incentives or pressures that introduce forecast bias. For example, agency forecasters may be rewarded for a rosy growth forecast that allows politicians to avoid politically costly program cuts or tax increases. Similarly they may be penalized for underforecasting economic growth. Where a reward system is asymmetric, it would make sense to observe biased forecasts.
Topic:
Government
Political Geography:
California

24. The Explicit Costs of Government Deposit Insurance

Author:
Thomas L. Hogan and William J. Luther
Publication Date:
03-2014
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
The Diamond-Dybvig (DD) model is often cited as a theoretical justification for government deposit insurance. In the model, rational agents find it in their interest to withdraw their bank deposits if they suspect other depositors plan to do likewise. When a sufficient number of agents are expected to liquidate their accounts, a bank run ensues. Guaranteeing deposits through a system of government administered deposit insurance removes the temptation to run on the bank and thereby precludes the need to ever use the deposit insurance.
Topic:
Government

25. Free Market Revolution: How Ayn Rand's Ideas Can End Big Government

Author:
Trevor Burrus
Publication Date:
03-2014
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
In Free Market Revolution: How Ayn Rand's Ideas Can End Big Government, Yaron Brook, executive director of the Ayn Rand Institute (ARI), and Don Watkins, a fellow at ARI, give a full-throated and spirited defense of Rand's arguments for freedom, self-actualization, and the just society. The book is a clear explanation of objectivism that weaves in timely and accurate policy discussions, such as the chapter on health care, that buttress the overall point.
Topic:
Government
Political Geography:
New York

26. Operation Twist-the-Truth: How the Federal Reserve Misrepresents Its History and Performance

Author:
George Selgin
Publication Date:
07-2014
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
For a private-sector firm, success can mean only one thing: that the firm has turned a profit. No such firm can hope to succeed, or even to survive, merely by declaring that it has been profitable. A government agency, on the other hand, can succeed in either of two ways. It can actually accomplish its mission. Or it can simply declare that it has done so, and get the public to believe it.
Topic:
Government
Political Geography:
United States

27. The Troubling Suppression of Competition from Alternative Monies: The Cases of the Liberty Dollar and E-gold

Author:
Lawrence H. White
Publication Date:
07-2014
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Proposals abound for reforming monetary policy by instituting a less-discretionary or nondiscretionary system ("rules") for a fiat-money- issuing central bank to follow. The Federal Reserve's Open Market Committee could be given a single mandate or more generally an explicit loss function to minimize (e.g., the Taylor Rule). The FOMC could be replaced by a computer that prescribes the monetary base as a function of observed macroeconomic variables (e.g., the McCallum Rule). The role of determining the fiat monetary base could be stripped from the FOMC and moved to a prediction market (as proposed by Scott Sumner or Kevin Dowd). Alternative proposals call for commodity money regimes. The dollar could be redefined in terms of gold or a broader commodity bundle, with redeemability for Federal Reserve liabilities being reinstated. Or all Federal Reserve liabilities could actually be redeemed and retired, en route to a fully privatized gold or commodity-bundle standard (White 2012). All of these approaches assume that there will continue to be a single monetary regime in the economy, so that the way to institute an alternative is to transform the dominant regime.
Topic:
Government
Political Geography:
United States

28. The Conduct of Monetary Policy

Author:
Kevin Warsh
Publication Date:
10-2013
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
The Federal Reserve's independence is essential to the conduct of monetary policy. But while the Fed is independent within government, it is not independent of government. The grant of authority to the Fed comes from Congress, to which the Fed is ultimately accountable. In my view, the Fed was granted significant powers by Congress, but those powers were not unlimited. The grant of authority was constrained. So by my measure, the Fed is a powerful institution, but a bounded one.
Topic:
Government

29. What's Wrong with the Fed? What Would Restore Independence?

Author:
Allan H. Meltzer
Publication Date:
10-2013
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
On September 1, 1948, Allan Sproul, president of the Federal Reserve Bank of New York, commented on Fed independence: I don't suppose that anyone would still argue that the central banking system should be independent of the Government of the country. The control which such a system exercises, over the volume and value of money is a right of Government and is exercised on behalf of Government, with powers delegated by the Government. But there is a distinction between independence from Government and independence from political influence in a narrower sense. The powers of the central banking system should not be a pawn of any group or faction or party, or even any particular administration, subject to political pressures and its own passing fiscal necessities [Letter to Robert R. Bowie, in Meltzer 2003: 738].
Topic:
Government
Political Geography:
New York

30. Federal Reserve Independence: Reality or Myth?

Author:
Gerald P. O'Driscoll Jr. and Thomas F. Cargill
Publication Date:
10-2013
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
The Federal Reserve was founded in 1913 during the Wilson administration to end banking panics and depressions, and was part of the Progressive agenda for a more activist role of government (see Kolko 1963). By the 50th anniversary, the conventional wisdom was that the Fed's performance was overall satisfactory, especially after the Treasury-Federal Reserve Accord of 1951 that permitted independent monetary policy. While the decision to double reserve requirements in 1937 was judged a policy error, the Federal Reserve was not held responsible for the Great Depression.
Topic:
Government

31. Lessons from the European Crisis

Author:
Jurgen Stark
Publication Date:
10-2013
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
It was one of the author's predictions in 1998 that the euro zone would end up teaching us more about economics compared to what economics could teach us about the euro zone. While many of the author's predictions of that year did not hold, including the forecast that the euro would challenge the dollar as the world's foremost reserve currency, this particular prediction ultimately turned out to be correct. A monetary union is a hybrid between a fixed exchange rate system and a unitary state, one that is fully captured neither with closed-economy macro models nor classical international macro models of fixed exchange rates.
Topic:
Government
Political Geography:
Europe

32. 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

33. 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

34. 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

35. Renewing Federalism by Reforming Article V: Defects in the Constitutional Amendment Process and a Reform Proposal

Author:
Michael B. Rappaport
Publication Date:
01-2012
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
The constitutional amendment procedure of Article V is defective because the national convention amendment method does not work. Because no amendment can be enacted without Congress's approval, limitations on the federal government that Congress opposes are virtually impossible to pass. This defect may have prevented the enactment of several constitutional amendments that would have constrained Congress, such as amendments establishing a balanced budget limitation, a line-item veto, or congressional term limits. The increasingly nationalist character of our constitutional charter may not be the result of modern values or circumstances, but an artifact of a distorted amendment procedure. Article V should be reformed to allow two-thirds of the state legislatures to propose a constitutional amendment which would then be ratified or rejected by the states, acting through state conventions or state ballot measures. Such a return of power to the states would militate against our overly centralized government by helping to restore the federalist character of our Constitution. Moreover, a strategy exists that would allow this reform to be enacted.
Topic:
Civil Society, Government, Law Enforcement, and Law
Political Geography:
United States

36. The Independent Payment Advisory Board: PPACA's Anti-Constitutional and Authoritarian Super-Legislature

Author:
Michael F. Cannon and Diane Cohen
Publication Date:
06-2012
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
When a member of Congress introduces legislation, the Constitution requires that legislative proposal to secure the approval of the House of Representatives, the Senate, and the president (unless Congress overrides a presidential veto) before it can become law. In all cases, either chamber of Congress may block it.
Topic:
Government, Politics, Governance, and Law
Political Geography:
United States

37. 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

38. 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

39. If You Love Something, Set It Free A Case for Defunding Public Broadcasting

Author:
Trevor Burrus
Publication Date:
05-2012
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
Public broadcasting has been in critics' crosshairs since its creation in 1967. Assailed from all sides with allegations of bias, charges of political influence, and threats to defund their operations, public broadcasters have responded with everything from outright denial to personnel changes, but never have they squarely faced the fundamental problem: government-funded media companies are inherently problematic and impossible to reconcile with either the First Amendment or a government of constitutionally limited powers.
Topic:
Government, Communications, Mass Media, and Law
Political Geography:
United States

40. 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

41. 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

42. 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

43. 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

44. The New Monetary Economics Revisited

Author:
David Cronin
Publication Date:
10-2012
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
This article revisits the key conceptual aspects of the New Monetary Economics (NME) by examining the idea of “monetary separation” and objections raised against it. So long as a dominant role for base money in exchange exists, using it to provide the unit of account remains advantageous and is likely to outweigh any mooted benefits of separation. Recent quantitative analysis, however, shows the transaction demand for government base money to be falling, a development that can be expected to continue in the years ahead. The passage of time thus seems to be weakening the principal basis on which monetary separation has been criticized—namely, the superiority of base money in payments. That development fits into the history of money told by Austrian economists, which emphasises payment practices evolving over time in response to technological improvements and market forces.
Topic:
Government
Political Geography:
Europe, Germany, Cyprus, and Luxembourg

45. Starving the Beast Revisited

Author:
Masoud Moghaddam
Publication Date:
10-2012
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
The determinants of government budget deficits have been studied extensively, especially during the years in which the discrepancy between federal income taxes and expenditures has widened. In that respect, it is of interest to explore the causal relationship between government revenues and expenditures. If the direction of causation is from taxes to spending, then enjoying tax cuts without cutting expenditures necessitates starving the beast, as suggested by Milton Friedman (1978) and confirmed by a number of studies including Garcia and Henin (1999), and Chang, Liu, and Caudill (2002). On the other hand, if a tax cut is perceived by rational agents to be a cut in the cost of public goods, then spending would increase. In that case, taxes and spending are inversely related. Support for that relationship—the so-called fiscal illusion hypothesis—is provided by Wagner (1976), Niskanen (1978, 2002, 2006), and more recently by New (2009) and Young (2009). There are also a few studies in which no significant causal relation between tax and spend variables has been reported (e.g., Baghestani and McNown (1994).
Topic:
Government

46. The Scope of Government in a Free Society

Author:
James A. Dorn
Publication Date:
10-2012
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
The purpose of this article is to delineate the legitimate functions of government in a free society. This exercise differs from determining the “optimal” size of government, which economists have estimated at 15 to 30 percent of gross domestic product. James Madison, the chief architect of the U.S. Constitution, was not primarily looking for an engine of economic growth; he was seeking an institutional design to limit the powers of government and protect individual rights. People would then be free to pursue their happiness and, in the process, create wealth.
Topic:
Government
Political Geography:
United States

47. Honest Money

Author:
Jerry L. Jordan
Publication Date:
09-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
This article addresses some of the recent proposals for the conduct of monetary policies in the post-bubble environment. Advocacy of higher inflation targets is analyzed, and the challenge of maintaining monetary discipline in the face of massive fiscal deficits and mounting government debts is presented. Proposals for reforms of monetary arrangements must be based on consensus regarding the objectives of such reforms. The article concludes with some suggestions for near- and intermediate-term changes to present arrangements, as well as ideas for longer-term reforms.
Topic:
Government and Reform
Political Geography:
Canada

48. Robust Political Economy: Classical Liberalism and the Future of Public Policy

Author:
Richard L. Gordon
Publication Date:
09-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Pennington undertakes a needed effort to provide a systematic, analytic critique of recent efforts to discredit what he terms “classical liberal economics.” His is effectively the standard but hard-to-sell proposition that prescient impartial counselors—Plato's philosopher kings—have failed to emerge from the development of modern knowledge. In particular, Pennington makes good use of Hayek's radical contrast between the competitive testing of concepts in a spontaneous market order and the construction of solutions by government monopolies. As Pennington's conclusions nicely summarize, skepticism of limited government is high and fostered by those who are seeking rents from intervention. Thus, ideas that committed libertarians see as obviously absurd need systematic debunking for a broader audience. Pennington, therefore, pretends that he is treating serious arguments and confronts them respectfully.
Topic:
Government and Political Economy
Political Geography:
United States

49. Social Security's Financial Outlook and Reforms: An Independent Evaluation

Author:
Jagadeesh Gokhale
Publication Date:
10-2011
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
Social Security is often described as a "foundational" element of the nation's social safety net. Almost all Americans are directly affected by the program and many millions primarily depend on its benefits for supporting themselves during retirement. But the program's financial condition has worsened considerably since the last recession, which began in 2007. In that year, the Social Security trustees estimated that the program's trust fund would be exhausted by 2042. The trustees' annual report for 2011 brings the trust fund exhaustion date forward to 2038. Indeed, the programs revenues fell short of its benefit expenditures in 2010 and it appears unlikely that significant surpluses will emerge again under the program's current rules. If the program's finances continue to worsen at this rate, it won't be long before the debate on reforming the program assumes an urgency and intensity similar to that during 1982-83, when imminent insolvency forced lawmakers to implement payroll tax increases and scale back its benefits.
Topic:
Economics, Government, and Human Welfare
Political Geography:
America and Ethiopia

50. The Virtues of Free Markets

Author:
Mark A. Zupan
Publication Date:
06-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Free markets have many virtues. Arguably, the most recognized is the expansion of individual choice—and thus freedom—through mutually beneficial exchange (see Bauer's definition of economic development in Dorn 2002: 356). This proposition is at the heart of the enduring impact of Adam Smith's Wealth of Nations ([1776] 1937) which aptly spells out the benefits of the Invisible Hand for citizens and societies.
Topic:
Government