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302. 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
303. Editor's Note
- Author:
- James Dorn
- Publication Date:
- 01-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Immigration has been instrumental in U.S. history in promoting economic development and increasing the range of options open to people. Millions of immigrants have come to America in search of opportunities to improve their lives and to raise their families. They have taken great risks and worked hard to ensure a better and freer future for themselves and their families.
- Topic:
- Immigration
- Political Geography:
- United States
304. Introduction: Is Immigration Good for America?
- Author:
- Daniel Griswold
- Publication Date:
- 01-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- The question of whether immigration has been good for America has been on the minds of Americans since the beginning of our republic and continues in the pages of this issue of the Cato Journal. As the United States enters another presidential election year, President Obama has been calling on Congress to enact immigration reform while his administration has been deporting record numbers of unauthorized immigrants. Meanwhile, Republican presidential candidates have been competing with each other to adopt the toughest positions to enforce existing law, including the completion of a fence along the entire 2,000-mile border with Mexico. Outside of Washington, legislatures in Arizona, Georgia, Alabama, and other states have enacted laws designed to make life more difficult for undocumented immigrants.
- Topic:
- Immigration
- Political Geography:
- America, Washington, Georgia, Mexico, Alabama, and Arizona
305. Why Should We Restrict Immigration?
- Author:
- Bryan Caplan
- Publication Date:
- 01-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Consider the following thought experiment: Moved by the plight of desperate earthquake victims, you volunteer to work as a relief worker in Haiti. After two weeks, you're ready to go home. Unfortunately, when you arrive at the airport, customs officials tell you that you're forbidden to enter the United States. You go to the American consulate to demand an explanation. But the official response is simply, “The United States does not have to explain itself to you.”
- Political Geography:
- United States
306. Immigration and Economic Growth
- Author:
- Gordon H. Hanson
- Publication Date:
- 01-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- As the 2012 presidential campaign gets under way, there will be intense public debate about the direction of economic policy. The continuing torpor of the U.S. economy and mounting government debt oblige candidates to detail how they would improve prospects for economic growth and reduce the federal budget deficit. We are sure to hear a great deal about plans to lower taxes, reduce government regulation, improve U.S. education, and rebuild infrastructure. But it is a near certainty that no candidate will make immigration part of his or her vision for achieving higher rates of long-run economic growth. To be sure, stump speeches will contain pat pronouncements about securing American borders, restoring the rule of law, or bringing undocumented immigrants out of the shadows, depending on the candidate's political orientation. Yet, it is a safe bet that after getting through these bullet points candidates will seek to change the subject. Immigration is a divisive issue that most national politicians prefer to avoid. President Obama checked his immigration box by making a halfhearted call for immigration reform in May 2011. That proposal was quickly buried under many more pressing items in his legislative outbox.
- Topic:
- Immigration
- Political Geography:
- United States and America
307. Immigration, Labor Markets, and Productivity
- Author:
- Giovanni Peri
- Publication Date:
- 01-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- According to a survey in 2008, about 50 percent of Americans perceived immigration as a problem rather than as an opportunity (Transatlantic Trends 2008). Similar surveys conducted in the prerecession years of 2007 and before also showed that Americans were much less supportive of more open immigration policies than they were of other aspects of globalization such as free trade or free capital movements (Pew Research Center 2007). Since the onset of the recession of 2008–2009 and during the jobless recovery of 2010–11, public opinion about immigration further deteriorated. The idea that immigrants take American jobs, depress national wages, and threaten the U.S. economy has become even more rooted, as often happens during economic recessions. The political discourse accompanying the economic and labor market impact of immigrants is very intense and pervasive in the media but often generates “more heat than light”.
- Topic:
- Immigration
- Political Geography:
- United States and America
308. America's Demographic Future
- Author:
- Joel Kotkin and Erika Ozuna
- Publication Date:
- 01-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Perhaps nothing has more defined America and its promise than immigration. In the future, immigration and the consequent development of what Walt Whitman (1855: iv) called “a race of races” will remain one of the country's greatest assets in the decades to come.
- Political Geography:
- America
309. America's Incoherent Immigration System
- Author:
- Stuart Anderson
- Publication Date:
- 01-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- If the U.S. Congress and executive branch agencies formulated coherent policies, then here is what our immigration system would look like: highly skilled foreign nationals could be hired quickly and gain permanent residence, employers could hire foreign workers to fill niches in lower-skilled jobs, foreign entrepreneurs could easily start businesses in the United States, and close relatives of American citizens could immigrate in a short period of time. If all those things were true, then we wouldn't be talking about America's immigration system.
- Topic:
- Immigration
- Political Geography:
- United States and America
310. The Economic Consequences of Amnesty for Unauthorized Immigrants
- Author:
- Pia Orrenius and Madeline Zavodny
- Publication Date:
- 01-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Immigration policy reform has reached an impasse because of disagreement over whether to create a pathway to legal permanent residence and eventual U.S. citizenship for unauthorized immigrants. The United States first—and last—offered a large-scale amnesty as part of the Immigration Reform and Control Act (IRCA) in 1986. Despite increased border enforcement and provisions for employer sanctions, the law failed to curtail unauthorized immigration. The 9/11 terror attacks renewed the emphasis on national security and led to stricter policies regarding undocumented immigrants. Over the past decade, border and interior enforcement has increased, while avenues that allowed some illegal residents to adjust to legal status have been eliminated, and a growing number of states have adopted laws aimed at driving out unauthorized immigrants.
- Political Geography:
- United States
311. Immigration and Border Control
- Author:
- Edward Alden
- Publication Date:
- 01-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- For the past two decades the United States, a country with a strong tradition of limited government, has been pursuing a widely popular initiative that requires one of the most ambitious expansions of government power in modern history: securing the nation's borders against illegal immigration. Congress and successive administrations— both Democratic and Republican—have increased the size of the Border Patrol from fewer than 3,000 agents to more than 21,000, built nearly 700 miles of fencing along the southern border with Mexico, and deployed pilotless drones, sensor cameras, and other expensive technologies aimed at preventing illegal crossings at the land borders. The government has overhauled the visa system to require interviews for all new visa applicants and instituted extensive background checks for many of those wishing to come to the United States to study, travel, visit family, or do business. It now requires secure documents—a passport or the equivalent—for all travel to and from the United States by citizens and noncitizens. And border officers take fingerprints and run other screening measures on all travelers coming to this country by air in order to identify criminals, terrorists, or others deemed to pose a threat to the United States.
- Topic:
- International Security and Immigration
- Political Geography:
- United States and Mexico
312. Internal Enforcement, E-Verify, and the Road to a National ID
- Author:
- Jim Harper
- Publication Date:
- 01-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Successful “internal enforcement” of immigration law requires having a national identity system. If expanded, “E-Verify,” the muchdebated effort to control illegal immigration through access to employment, will become such a system, and it could easily be converted to controlling many dimensions of Americans' lives from Washington, D.C.
- Topic:
- Immigration
- Political Geography:
- America
313. Is Birthright Citizenship Good for America?
- Author:
- Margaret Stock
- Publication Date:
- 01-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- The Declaration of Independence famously asserted that “all men are created equal,” but this assertion did not become an American constitutional reality until the Fourteenth Amendment was ratified in 1868. The Fourteenth Amendment's Citizenship Clause—intended to overturn the infamous U.S. Supreme Court decision in the Dred Scott (1857) case—states that “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the state wherein they reside.” Traditionally, the clause has been interpreted to confer U.S. citizenship on anyone born within the United States whose parents are subject to U.S. civil and criminal laws—which has historically meant that only babies born in the United States to diplomats, invading armies, or within certain sovereign Native American tribes have been excluded from birthright American citizenship. Alarmed by the thought that unauthorized immigrants, wealthy tourists, and temporary workers are giving birth to thousands of U.S. citizens, some want to change the long-standing rule by reinterpreting or amending the Citizenship Clause. But will this proposed change be good for America? Will it benefit America to reduce substantially the number of birthright U.S. citizens—and put in place more complex rules that would provide that U.S.-born babies are not created equal?
- Political Geography:
- United States and America
314. Immigration and the Welfare State
- Author:
- Daniel Griswold
- Publication Date:
- 01-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Among the more serious arguments against liberalizing immigration is that it can be costly to taxpayers. Low-skilled immigrants in particular consume more government services than they pay in taxes, increasing the burden of government for native-born Americans. Organizations such as the Center for Immigration Studies, the Heritage Foundation, and the Federation for American Immigration Reform have produced reports claiming that immigration costs taxpayers tens of billions of dollars a year, with the heaviest costs borne by state and local taxpayers. No less a classical liberal than Milton Freidman mused that open immigration is incompatible with a welfare state. Responding to a question at a libertarian conference in 1999, Friedman rejected the idea of opening the U.S. border to all immigrants, declaring that “You cannot simultaneously have free immigration and a welfare state” (Free Students 2008).
- Political Geography:
- United States and America
315. 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
316. U.S. Immigration Policy in the 21st Century: A Market-Based Approach
- Author:
- Richard Vedder, Joshua C. Hall, and Benjamin J. VanMetre
- Publication Date:
- 01-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- On most issues of public policy one can predict the position that individuals will take based on their ideological orientation. Immigration policy, however, is one topic where ideological perspective is historically useless in predicting individual positions. The decision of whether or not to liberalize immigration policy or to place greater restrictions on it is something that creates a divide not only between political parties but also within the parties themselves. Peter Brimelow (1999) is one prominent voice from the right who believes that the current immigration policies not only second-guess the American people but threaten the American nation. Brimelow is a strong supporter of placing restrictions on immigration at levels that are much lower than those that currently exist. A similar position is taken by the libertarian political philosopher Hans-Hermann Hoppe. Specifically, Hoppe (1998) argues that the United States will continue to suffer until policies are implemented that subject all migration to the condition of legally binding contractual invitations between the private domestic persons and the arriving immigrants.
- Topic:
- Immigration
- Political Geography:
- United States
317. James Madison
- Author:
- John Samples
- Publication Date:
- 01-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Richard Brookhiser, a longtime senior editor of National Review, has contributed more than most to satisfying the revivified demand for books about the lives and works of the American Founders. He has published books about Washington, Hamilton, the Adamses, Gouverneur Morris, and now James Madison. His biography is both serious and readable.
- Political Geography:
- China, America, and Washington
318. The Ethics of Voting
- Author:
- Aaron Powell
- Publication Date:
- 01-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Grab anyone at a coffee shop, political rally, or cocktail party. Ask him, “Do you think we have a duty to vote?” Chances are he'll say “Yes.” Follow it up with, “Is it because there's something special about voting that places it above other duties we might have, like sayavoiding speeding or paying our taxes?” It's a safe bet you'll get a “yes” to this one as well.Jason Brennan calls the thinking behind these twin affirmatives the “folk theory of voting ethics.” It's the common view of civics classes, straw polls, and town hall meetings. The folk theory is what we all learn in school, along with the three branches of government and the Founding Fathers.
- Political Geography:
- America
319. The Concept of Justice: Is Social Justice Just?
- Author:
- Trevor Burrus
- Publication Date:
- 01-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Justice is the primary object of political philosophy. Yet, like so many of our highest aspirations, we are prone to use capacious words that can create consensus in their most abstract formulations but engender discord, if not worse, in more specific forms. “Justice” hasalways been like this. During a civil war or an intense political conflict, both sides will preach the justness of their cause, and neither will claim to be fighting on the side of “injustice.”
- Topic:
- War
320. Editor's Note
- Author:
- James A. Dorn
- Publication Date:
- 06-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- This special issue of the Cato Journal stems from the Cato Institute's 29th Annual Monetary Conference—Monetary Reform in the Wake of Crisis—held in Washington, D.C., November 16, 2011. At no time since the founding of the Federal Reserve nearly a century ago has it been more important to reconsider the role of monetary policy in a free society. In particular, as F. A. Hayek noted, “All those who wish to stop the drift toward increasing government control should concentrate their effort on monetary policy.”
- Political Geography:
- Washington
321. The Eurozone Crisis and Global Monetary Reform: A Conversation
- Author:
- Robert B. Zoellick and Sebastian Mallaby
- Publication Date:
- 06-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Sebastian Mallaby: We are here to talk to Bob Zoellick. I have been in Washington 16 years, Bob is the personification of the kind of silo busting polymathic energy which says, I am not just interested in international economics, I am not just interested in international relations, I am not just a U.S. government official, I am also going to do multilateral diplomacy. So Bob has been on all sides of those various divides. He has a voracious intellect, so it is always interesting to speak with him whether he is in office or out of office.
- Topic:
- International Relations
- Political Geography:
- United States, Europe, and Washington
322. Understanding the Interventionist Impulse of the Modern Central Bank
- Author:
- Jeffrey M. Lacker
- Publication Date:
- 06-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- The financial crisis of 2007 and 2008 was a watershed event for the Federal Reserve and other central banks. The extraordinary actions they took have been described, alternatively, as a natural extension of monetary policy to extreme circumstances or as a problematic exercise in credit allocation. I have expressed my view elsewhere that much of the Fed's response to the crisis falls in the latter category rather than the former (Lacker 2010). Rather than reargue that case, I want to take this opportunity to reflect on some of the institutional reasons behind the prevailing propensity of many modern central banks to intervene in credit markets.
- Topic:
- Financial Crisis
- Political Geography:
- United States
323. Federal Reserve Policy in the Great Recession
- Author:
- Allan H. Meltzer
- Publication Date:
- 06-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Overresponse to short-run events and neglect of longer-term consequences of its actions is one of the main errors that the Federal Reserve makes repeatedly. The current recession offers many examples of actions that some characterize as bold and innovative. I regard many of these actions as inappropriate for an allegedly independent central bank because they involve credit allocation, fill the Fed's portfolio with an unprecedented volume of long-term assets, evade or neglect the dual mandate, distort the credit markets, and initiate other actions that are not the responsibility of a central bank.
- Political Geography:
- America
324. The Fed's Fatal Conceit
- Author:
- John A. Allison
- Publication Date:
- 06-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- I strongly believe that the recent financial crisis, ensuing recession, and slow recovery were primarily caused by government policy. The Federal Reserve made some very bad monetary decisions that created a bubble, i.e., a massive malinvestment. The bubble ended up being focused in the housing market largely because of government affordable housing policies—specifically, the actions of Freddie Mac and Fannie Mae, government-sponsored enterprises that would not exist in a free market. When Freddie and Fannie failed, they owed $5.5 trillion including $2 trillion in affordable housing (subprime) loans. It's true that a number of banks made serious mistakes, and I would have let them fail, but their mistakes were secondary and within the context of government policy.
- Political Geography:
- United States
325. Only a Crisis Will Bring Money Reform
- Author:
- George Melloan
- Publication Date:
- 06-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- “Well, if I had a nickel, I know what I would do. I'd spend it all on candy and give it all to you. . . . Cause that's how much I love you baby.” That wasn't a very generous proposition even in 1946, when country singer Eddy Arnold wrote those words. But at least a nickel would buy a good-sized Baby Ruth or Clark bar. Today? A jelly bean, perhaps?
- Political Geography:
- United States and United Kingdom
326. Banking Dysfunction
- Author:
- James A. Grant
- Publication Date:
- 06-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- "Has anyone bothered to study the cumulative effect of all these things?" the chief executive officer of JPMorgan Chase reasonably inquired of the chairman of the Federal Reserve Board at a bankers gathering in Atlanta last June. The CEO, Jamie Dimon, was referring to the combination of cyclical hangover and regulatory constriction. The chairman, Ben Bernanke, replied, "It's just too complicated. We don't really have the quantitative tools to do that" (Grant and Masters 2011: 1).
- Political Geography:
- America
327. What Should a Central Bank (Not) Do?
- Author:
- Benn Steil
- Publication Date:
- 06-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- The financial crisis that began unfurling in 2008 has led to the refashioning of the model central bank governor along the lines of Churchillian war leader, willing to try anything with the money he conjures to restore economic growth. This raises important questions as to what limits, if any, elected officials should impose on such aspiring great men, and what limits markets will ultimately impose on them if elected officials forbear. This article focuses on the second of these questions.
- Political Geography:
- United States
328. L Street: Bagehotian Prescriptions for a 21st Century Money Market
- Author:
- George Selgin
- Publication Date:
- 06-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- In Lombard Street, Walter Bagehot (1873) offered his famous advice for reforming the Bank of England's lending policy. The financial crisis of 1866, and other factors, had convinced Bagehot that instead of curtailing credit to conserve the Bank's own liquidity in the face of an “internal drain” of specie, and thereby confronting the English economy as a whole with a liquidity shortage, the Bank ought to “lend freely at high rates on good collateral.” Bagehot's now-famous advice has come to be known as the “classical” prescription for last-resort lending.
- Political Geography:
- England
329. Gold and Government
- Author:
- Judy Shelton
- Publication Date:
- 06-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Something has gone terribly wrong with the world's monetary system. It's evident that some kind of fundamental reform needs to be implemented. The question is: Can governments be trusted to issue sound money, or is money too important to be left to the politicians?
- Political Geography:
- United States
330. From Constitutional to Fiat Money: The U.S. Experience
- Author:
- Richard H. Timberlake
- Publication Date:
- 06-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Over the course of more than two centuries, the United States has had two monetary systems. The first was a gold-silver standard that was framed in its essentials by the U.S. Constitution. In practical terms, it said that any legal tender money created by the federal union or the states or the "people" had to be gold or silver coins, or redeemable in gold or silver coins of specified weight and fineness. Since both gold and silver were constitutional media, the country had a bimetallic standard that ultimately became a monometallic gold standard.
- Political Geography:
- United States
331. The Coming Fiat Money Cataclysm and the Case for Gold
- Author:
- Kevin Dowd, Martin Hutchinson, and Gordon Kerr
- Publication Date:
- 06-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- A recurring theme in monetary history is the conflict of trust and authority: the conflict between those who advocate a spontaneous monetary order determined by free exchange under the rule of law and those who wish to meddle with the monetary system for their own ends. This conflict is perhaps most clearly seen in the early 20th century controversy over the "state theory of money" (or "chartalism"), which maintained that money is a creature of the state. The one side was represented by the defenders of the old monetary order-most notably by the Austrian economists Ludwig von Mises and Friedrich Hayek, and by the German sociologist Georg Simmel. The other side was represented by the German legal scholar Georg Friedrich Knapp and by John Maynard Keynes. They argued that on monetary matters the government should be free to do whatever it liked, free from any constraints of law or even conventional morality.
- Topic:
- War
- Political Geography:
- Germany and Australia
332. Why Monetary Freedom Matters
- Author:
- Ron Paul
- Publication Date:
- 06-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- I've thought about and have written about the Federal Reserve for a long time. I became fascinated with the monetary issue in the 1960s, having come across the Austrian economists, especially Hayek and Mises, and I was very impressed with August 15, 1971, because the predictions made in the 1960s came about. As a matter of fact, Henry Hazlitt made that prediction in 1944 when the Bretton Woods system was set up. He said it wouldn't work and it would fall apart—and it did—so that was a strong confirmation.
- Political Geography:
- United States and Australia
333. Where Is Private Note Issue Legal?
- Author:
- Kurt Schuler and William McBride
- Publication Date:
- 06-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- During the 18th and 19th centuries and for part of the 20th century, more than 60 countries had free banking. The major characteristics of free banking are competitive issue of notes (paper money) and deposits by commercial banks, low legal barriers to entry, little regulation unique to the industry, and no central control of reserves (the monetary base) within the national monetary system (Dowd 1992, White 1995). Among the countries that had a form of free banking was the United States. Even after the freest period of free banking ended, with the Civil War, banks continued to issue notes until the federal government effectively monopolized note issue in 1935.
- Topic:
- War
- Political Geography:
- United States
334. Making the Transition to a New Gold Standard
- Author:
- Lawrence H. White
- Publication Date:
- 06-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Suppose for the sake of argument that we all agree to the following proposition: If we could change the monetary regime with zero switching cost, merely by snapping our fingers, we would prefer the United States to be on a gold standard. In the most general terms, a gold standard means a monetary system in which a standard mass (so many grams or ounces) of pure gold defines the unit of account, and standardized pieces of gold serve as the ultimate media of redemption. Currency notes, checks, and electronic funds transfers are all denominated in gold and are redeemable claims to gold. We then face the question: What would be the least costly way for the United States to make the transition to a new gold standard? We need to choose a low-cost method to ensure that the agreed benefits of being on the gold standard exceed the costs of switching over.
- Political Geography:
- United States
335. Natural Rates of Interest and Sustainable Growth
- Author:
- Roger W. Garrison
- Publication Date:
- 06-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- The evolution of macroeconomic theory and monetary policy has brought us to a state that calls for critical reflection. It is undoubtedly true that no newcomer to the field can even begin to understand the current state of macroeconomics and policy formulation without understanding just how, dating from the pre-Keynesian era, the profession has arrived at this state. High theory today takes the form of stochastic dynamic general equilibrium analysis, while policy discussion, which concerns itself with economy-wide disequilibrium, centers on the effectiveness (or ineffectiveness) of old-style fiscal and monetary stimulants. The market is a process and so too is the theorizing about it. The history of macroeconomic thought reasserts its relevance at times of economic crises and almost inevitably leads us to the question "How far back do we have to go to start all over?"
- Topic:
- Monetary Policy
336. Toward a Global Monetary Order
- Author:
- Gerald P. O'Driscoll Jr.
- Publication Date:
- 06-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- I will begin by disputing that there is a global monetary system. We do not have a system in any meaningful sense. There are 182 independent currencies in the world. Some currencies are fixed in relation to other, larger currencies (e.g., the Hong Kong dollar to the U.S. dollar). Some currencies move within a band against other currencies (e.g., the Singapore dollar and the Chinese yuan). Many currencies float on foreign exchange markets, but few float freely. Four major currencies float against each other: the U.S. dollar, the euro, the pound, and the yen. Countries also change their foreign exchange regime (e.g., Mexico in recent decades).
- Topic:
- Foreign Exchange
- Political Geography:
- Mexico and Singapore
337. Political Philosophy Clearly: Essays on Freedom and Fairness, Property and Equalities
- Author:
- Aaron Ross Powell
- Publication Date:
- 06-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Political Philosophy, Clearly, part of Liberty Fund's "Collected Papers of Anthony de Jasay" series, gathers nearly two dozen essays from the prominent economist and philosopher. From them emerges a fascinating overview of de Jasay's thought on the nature of order, justice, and the state.
338. Collision Course: Ronald Reagan, the Air Traffic Controllers, and the Strike that Changed America
- Author:
- Ivan Osorio
- Publication Date:
- 06-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- President Ronald Reagan's firing of more than 12,000 illegally striking air traffic controllers in August 1981 is widely considered a defining moment both for Reagan's presidency and for American organized labor. For Reagan, it was the first of many lines in the sand he drew during his presidency. For organized labor, it marked an assault from an anti-union president determined to prevail against a Democratic constituency.
- Political Geography:
- America
339. Does the Elephant Dance? Contemporary Indian Foreign Policy
- Author:
- Malou Innocent
- Publication Date:
- 06-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- After more than 20 years of major market reforms that followed a foreign exchange crisis in 1991, India's stunning economic growth has enlarged its international profile. But unlike China, India's security challenges and perspectives on foreign policy remain largely unknown to the rest of the world. What kind of great power does India aim to be?
- Topic:
- Foreign Policy and Foreign Exchange
- Political Geography:
- China and India
340. 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
341. 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
342. 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
343. 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
344. 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
345. 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
346. 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
347. 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
348. 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
349. 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
350. 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
351. 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
352. Editor's Note: A Tribute to William A. Niskanen
- Author:
- James A. Dorn
- Publication Date:
- 10-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- This issue of the Cato Journal is dedicated to William Niskanen, who passed away on October 26, 2011, at the age of 78. From 1985 to 2008, Bill served as chairman of the Cato Institute and a full-time economic scholar. He continued working as chairman emeritus and distinguished senior economist until his death. He was also on the editorial boards of Regulation magazine and the Cato Journal.
- Topic:
- Disaster Relief
353. Alternative Political and Economic Futures for Europe
- Author:
- William A. Niskanen
- Publication Date:
- 10-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Defeat of a proposed constitution for the European Union by voters in France and the Netherlands in 2005 should have provided an opportunity to reflect on a broader range of alternative political and economic futures for Europe. But it did not. For the Lisbon Treaty, which became effective in December 2009, implemented most of the provisions of the proposed constitution that the voters rejected more than four years prior. It was important to reconsider the major current European political and economic institutions as well as alternative steps toward further European integration. For the major current institutions were created under different conditions, and the experience suggests that they may not best serve the peoples of Europe under current and expected future conditions.
- Topic:
- Disaster Relief
- Political Geography:
- Europe, France, and Netherlands
354. The Keynesian Path to Fiscal Irresponsibility
- Author:
- Dwight R. Lee
- Publication Date:
- 10-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- The basic idea behind Keynesian policy for achieving stable economic growth is straightforward, and superficially plausible. When the economy is in a downturn with underutilized resources, Keynesians believe the federal government should increase aggregate demand by increasing deficit spending through some combination of more spending and lower taxes. With the aid of a multiplier effect augmenting the government's increase in aggregate demand, the economy will move back toward full employment. In contrast, they believe that when aggregate demand exceeds the productive capacity of the economy, the federal government can prevent inflationary overheating by reducing demand with a budget surplus generated by some combination of less spending and higher taxes. The resulting decrease in government demand will be augmented by a reverse multiplier effect, which will reduce inflationary pressures by bringing aggregate demand back in line with the economy's productive capacity. As discussed by Keynes and his early followers, there was nothing fiscally irresponsible about such a policy. While the budget would not be balanced on a yearly basis, it would be balanced over time as budget deficits intended to moderate recessions would be offset by budget surpluses used to restrain economic exuberance.
355. Is the Washington Consensus Dead?
- Author:
- Deepak Lal
- Publication Date:
- 10-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- In the postwar years, most Third World countries turned inward partly in response to what they thought were the disastrous consequences of their 19th century integration into the world economy as the global economy collapsed in the Great Depression. The seeming success of Soviet central planning under Stalin also persuaded the leaders of these newly independent countries to substitute the plan for the market. Planning was all the rage, with the state seeking to control the commanding heights of the economy. Furthermore, the many theorists who created a seemingly "new development economics" provided the intellectual basis for the complex system of dirigiste controls on "anything that moved" (as one wit put it) in a market economy.
- Political Geography:
- Washington
356. Asset Bubbles and Supply Failures: Where Are the Qualified Sellers?
- Author:
- Bruce K. Gouldey and Clifford F. Thies
- Publication Date:
- 10-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- From their peak during the third quarter of 2007, to their trough during the first quarter of 2009, stock prices as measured by the S 500 fell 48 percent (see Figure 1). Through the third quarter of 2009, stock prices subsequently increased more than 40 percent. In contrast, housing prices, as measured by the Case-Shiller index, which fell 31 percent from their peak in the first quarter of 2006 to the first quarter of 2009, had not yet shown any sign of recovery.
357. Decisionmaking, Risk, and Uncertainty: An Analysis of Climate Change Policy
- Author:
- Kruti Dholakia-Lehenbauer and Euel W. Elliott
- Publication Date:
- 10-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- This article explores four questions. First, what theoretical frameworks help describe policy failure and success? Second, how might the decision that leads to failure or success be understood in terms of differing concepts of rationality and decisionmaking? Third, how does the discussion of risk and uncertainty as originally proposed by Frank Knight (1921) apply to a better understanding of both the first and second questions? Fourth, what is the relationship between serial and parallel processing and how are these administrative systems related to important aspects of the prior questions? Our chief contribution in this article is to show the ways in which these questions and their respective theoretical frameworks are interrelated as applied to one important contemporary policy question-climate change. We think our proposed integration of the various literatures offers important insights into the challenges policymakers face in deciding whether or not to adopt a particular policy.
- Political Geography:
- United States
358. School Choice and Achievement: The Ohio Charter School Experience
- Author:
- Nathan L. Gray
- Publication Date:
- 10-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- K–12 education policy has recently received much scrutiny from policymakers, taxpayers, parents, and students. Reformers have often cited increases in spending with little noticeable gain in test scores, coupled with the fact that American students lag behind their foreign peers on standardized tests, as the policy problem. School choice, specifically charter school policy, has emerged as a potential remedy. School choice is hypothesized to have both participant and systemic (sometimes called competitive) effects. This article concentrates on the latter by using a novel design not used before in studies of this subject. School level data from Ohio are analyzed to estimate if traditional public schools potentially threatened by charter schools respond with positive test score gains. Specifically, an exogenous change to the education system in 2003 provides a natural experiment to examine potential systemic effects. Results indicate that the threat of charter schools seems to have had a small positive effect on traditional public school achievement.
- Political Geography:
- America
359. 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
360. 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
361. The Behavior of the Labor Market between Schechter (1935) and Jones Laughlin (1937)
- Author:
- Todd C. Neumann, Jason E. Taylor, and Jerry L. Taylor
- Publication Date:
- 10-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Recent research on the Great Depression emphasizes the role New Deal economic policy played in slowing recovery. Policies promoting cartels and higher wage rates during a time that the economy was experiencing unprecedented unemployment were likely to have created a negative supply shock that exacerbated economic depression rather than helped to alleviate it. Still, for 22 months between two important Supreme Court rulings, labor and product markets were relatively free of intervention. In A.L.A. Schechter Poultry Corp. v. United States (May 1935), the Court ruled that the National Industrial Recovery Act of 1933 (NIRA) was unconstitutional. In addition to setting up industry cartels, the NIRA had imposed relatively high minimum hourly wage rates and restrictions on work- weeks and required firms to recognize the right of labor to organize.
- Topic:
- International Political Economy
- Political Geography:
- United States
362. 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
363. The Money Trap: Escaping the Grip of Global Finance
- Author:
- Judy Shelton
- Publication Date:
- 10-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- To read Robert Pringle's new book, The Money Trap, is to experience the slow joy of recognizing that someone out there in the world of intellectual propriety and academic correctness is willing to state the case that the global financial crisis can be traced in large part to the lack of an orderly international monetary system.
364. The Partnership: Five Cold Warriors and the Quest to Ban the Bomb
- Author:
- Matt Fay
- Publication Date:
- 10-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Can four former Cold War policymakers and a prominent physicist of the era change the world through sheer force of personality? Former New York Times columnist Philip Taubman certainly thinks so, and in his new book he attempts to be the first to tell their story. The Partnership is the chronicle of how George Shultz, Sam Nunn, Henry Kissinger, William Perry, and Sidney Drell decided to take up the cause of nuclear abolition.
- Topic:
- Cold War and Nuclear Weapons
365. Stochastic Optimal Control and the U.S. Financial Debt Crisis
- Author:
- Peter Clark
- Publication Date:
- 10-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- At one point during the recent financial crisis the queen of England reportedly asked economists at the London School of Economics a seemingly straightforward question: “Why did academic economists fail to foresee the crisis?” This question can be broadened to include central banks, the International Monetary Fund, and technical specialists on Wall Street (“quants”). Jerome L. Stein, professor of economics (emeritus) and research professor in the Department of Applied Mathematics at Brown University, has written a timely book that provides a cogent and convincing answer to this question.
- Political Geography:
- United States
366. Sustaining China's Economic Growth after the Global Financial Crisis
- Author:
- James A. Dorn
- Publication Date:
- 10-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- As one of the world's leading experts on China's economic reforms, Nick Lardy has produced two earlier books that have become keys to understanding the challenges China faces in making the transition to a market economy and becoming a full-pledged member of the global liberal economic order. His 1998 volume on China's Unfinished Economic Revolution and his 2002 text on Integrating China into the Global Economy were both published by the Brookings Institution, where he was a senior fellow from 1995 until 2003, at which time he joined the Peterson Institute for International Economics, where he is now Anthony M. Solomon Senior Fellow.
- Political Geography:
- China
367. Warfare State: World War II Americans and the Age of Big Government
- Author:
- Charles Zakaib
- Publication Date:
- 10-2012
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- In 2008, many Americans feared another Great Depression had begun. Amidst all the gloom and doom, however, Rahm Emanuel, Barack Obama's incoming chief of staff, sounded more hopeful: “Never let a serious crisis go to waste. What I mean by that is it's an opportunity to do things you couldn't do before.” There is no greater example of that mantra in American history than World War II, a time of unprecedented government spending and unsurpassed government control over daily life. In Warfare State: World War II Americans and the Age of Big Government , James T. Sparrow demonstrates how, in a crisis, the government can increase its reach into Americans' lives by promising an ever-expanding set of rights and benefits.
- Political Geography:
- America
368. World Hyperinflations
- Author:
- Steve H. Hanke and Nicholas Krus
- Publication Date:
- 08-2012
- Content Type:
- Working Paper
- Institution:
- The Cato Institute
- Abstract:
- This chapter supplies, for the first time, a table that contains all 56 episodes of hyperinflation, including several which had previously gone unreported. The Hyperinflation Table is compiled in a systematic and uniform way. Most importantly, it meets the replicability test. It utilizes clean and consistent inflation metrics, indicates the start and end dates of each episode, identifies the month of peak hyperinflation, and signifies the currency that was in circulation, as well as the method used to calculate inflation rates.
- Topic:
- Economics, Globalization, International Trade and Finance, Markets, Monetary Policy, and Financial Crisis
369. The Economic Case against Arizona's Immigration Laws
- Author:
- Alex Nowrasteh
- Publication Date:
- 09-2012
- Content Type:
- Working Paper
- Institution:
- The Cato Institute
- Abstract:
- Arizona's immigration laws have hurt its economy. The 2007 Legal Arizona Workers Act (LAWA) attempts to force unauthorized immigrants out of the workplace with employee regulations and employer sanctions. The 2010 Support Our Law Enforcement and Safe Neigh¬borhoods Act (SB 1070) complements LAWA by granting local police new legal tools to enforce Ari¬zona's immigration laws outside of the workplace.
- Topic:
- Political Economy, Labor Issues, Immigration, and Law
- Political Geography:
- United States and Arizona
370. Still a Protectionist Trade Remedy: The Case for Repealing Section 337
- Author:
- K. William Watson
- Publication Date:
- 09-2012
- Content Type:
- Working Paper
- Institution:
- The Cato Institute
- Abstract:
- Section 337 of the Tariff Act of 1930 gives the United States International Trade Commis¬sion (ITC) the power to exclude products from the United States that are imported pursuant to “unfair methods of competition.” The range of potential activities covered by the law is broad, but the most common claim brought before the ITC is patent infringement. In addition to fil¬ing a lawsuit in federal district court, U.S. pat¬ent holders can often use Section 337 to bring a second case over the same subject matter as long as the defendant imports the impugned product from abroad. This tactic has become increasing¬ly popular because the ITC renders its decisions relatively quickly and has the authority to order a very powerful remedy—total exclusion of the product from the U.S. market.
- Topic:
- International Organization, International Trade and Finance, World Trade Organization, and Labor Issues
- Political Geography:
- United States
371. Economic Effects of Reductions in Defense Outlays
- Author:
- Benjamin Zycher
- Publication Date:
- 08-2012
- Content Type:
- Working Paper
- Institution:
- The Cato Institute
- Abstract:
- This study examines the prospective economic effects of a reduction below the current baseline in defense outlays of $100 billion per year over 10 years.
- Topic:
- Security, Defense Policy, Economics, and Labor Issues
- Political Geography:
- United States
372. Abolish the Department of Homeland Security
- Author:
- David Rittgers
- Publication Date:
- 09-2011
- Content Type:
- Working Paper
- Institution:
- The Cato Institute
- Abstract:
- After the terrorist attacks of September 11, 2001, Congress created the Department of Homeland Security (DHS), an umbrella organization that would oversee 22 preexisting federal agencies. The idea was to improve the coordination of the federal government's counterterrorism effort, but the result has been an ever-expanding bureaucracy.
- Topic:
- Intelligence, Terrorism, and Counterinsurgency
- Political Geography:
- United States
373. Private School Chains in Chile: Do Better Schools Scale Up?
- Author:
- Gregory Elacqua, Humberto Santos, Dante Contreras, and Felipe Salazar
- Publication Date:
- 08-2011
- Content Type:
- Working Paper
- Institution:
- The Cato Institute
- Abstract:
- There is a persistent debate over the role of scale of operations in education. Some argue that school franchises offer educational services more effectively than do small independent schools. Skeptics counter that large, centralized operations create hard-to-manage bureaucracies and foster diseconomies of scale and that small schools are more effective at promoting higher-quality education. The answer to this question has profound implications for U.S. education policy, because reliably scaling up the best schools has proven to be a particularly difficult problem. If there are policies that would make it easier to replicate the most effective schools, systemwide educational quality could be improved substantially.
- Topic:
- Development, Education, and Governance
- Political Geography:
- United States, Latin America, and Chile
374. Capital Inadequacies: The Dismal Failure of the Basel Regime of Bank Capital Regulation
- Author:
- Kevin Dowd, Martin Hutchinson, Jimi Hinchliffe, and Simon Ashby
- Publication Date:
- 07-2011
- Content Type:
- Working Paper
- Institution:
- The Cato Institute
- Abstract:
- The Basel regime is an international system of capital adequacy regulation designed to strengthen banks' financial health and the safety and soundness of the financial system as a whole. It originated with the 1988 Basel Accord, now known as Basel I, and was then overhauled. Basel II had still not been implemented in the United States when the financial crisis struck, and in the wake of the banking system collapse, regulators rushed out Basel III.
- Topic:
- Economics, International Trade and Finance, Markets, Monetary Policy, and Governance
- Political Geography:
- United States
375. Intercity Buses: The Forgotten Mode
- Author:
- Randal O'Toole
- Publication Date:
- 06-2011
- Content Type:
- Working Paper
- Institution:
- The Cato Institute
- Abstract:
- The debate over President Obama's fantastically expensive high-speed rail program has obscured the resurgence of a directly competing mode of transportation: intercity buses. Entrepreneurial immigrants from China and recently privatized British transportation companies have developed a new model for intercity bus operations that provides travelers with faster service at dramatically reduced fares.
- Topic:
- Economics, Markets, Infrastructure, and Governance
- Political Geography:
- United States and China
376. The Subprime Lending Debacle: Competitive Private Markets Are the Solution, Not the Problem
- Author:
- Patric H. Hendershott and Kevin Villani
- Publication Date:
- 06-2011
- Content Type:
- Working Paper
- Institution:
- The Cato Institute
- Abstract:
- The United States' market-government hybrid mortgage system is unique in the world. No other nation has such heavy government intervention in housing finance. This hybrid system nurtured the excessively risky loans, financed with too much leverage, that fueled the U.S. housing bubble of the last decade and resulted in the systemic collapse of the global financial system.
- Topic:
- Debt, Economics, and Financial Crisis
- Political Geography:
- United States
377. Federal Higher Education Policy and the Profitable Nonprofits
- Author:
- Vance Fried
- Publication Date:
- 06-2011
- Content Type:
- Working Paper
- Institution:
- The Cato Institute
- Abstract:
- Undergraduate education is a highly profitable business for nonprofit colleges and universities. They do not show profits on their books, but instead take their profits in the form of spending on some combination of research, graduate education, low-demand majors, low faculty teaching loads, excess compensation, and featherbedding. The industry's high profits come at the expense of students and taxpayer.
- Topic:
- Economics, Education, Markets, Privatization, and Governance
378. The Other Lottery: Are Philanthropists Backing the Best Charter Schools?
- Author:
- Andrew J. Coulson
- Publication Date:
- 06-2011
- Content Type:
- Working Paper
- Institution:
- The Cato Institute
- Abstract:
- The central problem confronting education systems around the world is not that we lack models of excellence; it is our inability to routinely replicate those models. In other fields, we take for granted an endless cycle of innovation and productivity growth that continually makes products and services better, more affordable, or both. That cycle has not manifested itself in education. Brilliant teachers and high-performing schools can be found in every state and nation, but, like floating candles, they flicker in isolation, failing to touch off a larger blaze.
- Topic:
- Economics, Education, and Markets
379. Crony Capitalism and Social Engineering: The Case against Tax-Increment Financing
- Author:
- Randal O'Toole
- Publication Date:
- 05-2011
- Content Type:
- Working Paper
- Institution:
- The Cato Institute
- Abstract:
- Tax-increment financing (TIF) is an increasingly popular way for cities to promote economic development. TIF works by allowing cities to use the property, sales, and other taxes collected from new developments—taxes that would otherwise go to schools, libraries, fire departments, and other urban services—to subsidize those same developments.
- Topic:
- Economics, Markets, Monetary Policy, and Governance
380. Leashing the Surveillance State: How to Reform Patriot Act Surveillance Authorities
- Author:
- Julian Sanchez
- Publication Date:
- 05-2011
- Content Type:
- Working Paper
- Institution:
- The Cato Institute
- Abstract:
- Congress recently approved a temporary extension of three controversial surveillance provisions of the USA Patriot Act and successor legislation, which had previously been set to expire at the end of February. In the coming weeks, lawmakers have an opportunity to review the sweeping expansion of domestic counter-terror powers since 9/11 and, with the benefit of a decade's perspective, strengthen crucial civil-liberties safeguards without unduly burdening legitimate intelligence gathering. Two of the provisions slated for sunsetroving wiretap authority and the so-called “Section 215” orders for the production of records—should be narrowed to mitigate the risk of overcollection of sensitive information about innocent Americans. A third—authority to employ the broad investigative powers of the Foreign Intelligence Surveillance Act against “lone wolf” suspects who lack ties to any foreign terror group—does not appear to be necessary at all.
- Topic:
- Defense Policy, Intelligence, National Security, Counterinsurgency, Governance, and Law
- Political Geography:
- United States
381. Fannie Mae, Freddie Mac, and the Future of Federal Housing Finance Policy: A Study of Regulatory Privilege
- Author:
- David Reiss
- Publication Date:
- 04-2011
- Content Type:
- Working Paper
- Institution:
- The Cato Institute
- Abstract:
- The federal government recently placed Fannie Mae and Freddie Mac, the government-chartered, privately owned mortgage finance companies, in conservatorship. These two massive companies are profit driven, but as government-sponsored enterprises (GSEs) they also have a government-mandated mission to provide liquidity and stability to the U.S. mortgage market and to achieve certain affordable housing goals. How the two companies should exit their conservatorship has implications that reach throughout the global financial markets and are of key importance to the future of American housing finance policy.
- Topic:
- Economics, Markets, Privatization, Financial Crisis, and Governance
- Political Geography:
- United States
382. Bankrupt: Entitlements and the Federal Budget
- Author:
- Michael Tanner
- Publication Date:
- 03-2011
- Content Type:
- Working Paper
- Institution:
- The Cato Institute
- Abstract:
- The U.S. government is about to exceed its statutory debt limit of $14.3 trillion. But that actually underestimates the size of the fiscal time bomb that this country is facing. If one considers the unfunded liabilities of programs such as Medicare and Social Security, the true national debt could run as high as $119.5 trillion.
- Topic:
- Debt, Economics, Human Welfare, Financial Crisis, Governance, and Health Care Policy
- Political Geography:
- United States
383. Putting Politics above Markets: Historical Background to the Greek Debt Crisis
- Author:
- Takis Michas
- Publication Date:
- 08-2011
- Content Type:
- Working Paper
- Institution:
- The Cato Institute
- Abstract:
- Political clientelism and rent seeking have been the central organizing principles of Greek society since the foundation of the Greek state in the 19th century. The influence of the Eastern Orthodox Church on Greek nationalism and the legacy of the patrimonialist Ottoman empire produced a weak civil society. The result has been a disproportionately large Greek state and public bureaucracy since the 1800s that set the stage for rent-seeking struggles that have followed.
- Topic:
- Corruption, Debt, Financial Crisis, and Governance
- Political Geography:
- Europe
384. Legislating a Rule for Monetary Policy
- Author:
- John B. Taylor
- Publication Date:
- 09-2011
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- In these remarks I discuss a proposal to legislate a rule for monetary policy. The proposal modernizes laws first passed in the late 1970s, but largely discarded in 2000.
- Topic:
- Monetary Policy
385. A Dangerous Brew for Monetary Policy
- Author:
- Charles I. Plosser
- Publication Date:
- 09-2011
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- It is a pleasure to join you at Cato's 28th Annual Monetary Conference. In preparing today's remarks, I noted that this year's topic of how monetary policy should deal with asset prices was also discussed here in 2008. The speakers at that time expressed a wide variety of views and opinions. The fact that this important question continues to resurface here and at other prominent meetings in recent years suggests that a consensus has yet to emerge.
- Topic:
- Monetary Policy
386. Limits of Monetary Policy in Theory and Practice
- Author:
- Vincent R. Reinhart and Carmen M. Reinhart
- Publication Date:
- 09-2011
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- The Federal Reserve's conduct of monetary policy casts a spell over market participants, commentators, and academics. The pages of financial newspapers parse subtle differences among the comments of Fed officials and delve deeply into potentially multiple meanings of official statements. Academic discussions argue that the path of the policy rate may (as in Taylor 2009) or may not (as in Bernanke 2010, and Greenspan 2010) have fueled a home-price bubble in the United States.
- Topic:
- Monetary Policy
- Political Geography:
- United States
387. The Revived Bretton Woods System, Liquidity Creation, and Asset Price Bubbles
- Author:
- Harris Dellas and George S. Tavlas
- Publication Date:
- 09-2011
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- In this article, we argue that the present constellation of exchange rate arrangements among the major currencies has led to the creation of excessive global liquidity, which has contributed to asset price bubbles. Although the exchange rates of many of the major currencies—including the U.S. dollar, the euro, the yen, and the pound sterling—float against each other, the currencies of many Asian emerging market economies and oil-exporting economies are pegged to the dollar. Dooley, Folkerts-Landau, and Garber (2004a) labeled this system “Bretton Woods II” (BWII). The original Bretton Woods regime (BWI) lasted for about a quarter of a century. Dooley, Folkerts-Landau, and Garber (DFG) argue that the present regime, despite its large global imbalances, will also be sustainable.
- Topic:
- Oil
- Political Geography:
- United States
388. A Gold Standard with Free Banking Would Have Restrained the Boom and Bust
- Publication Date:
- 09-2011
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- President George W. Bush famously remarked in July 2008 that during the housing boom “Wall Street got drunk . . . and now it has a hangover.” It was the Federal Reserve that spiked the punchbowl. The Fed sowed the seeds for the bust of 2007–08 by overexpanding credit, keeping interest rates too low for too long. The Fed made these mistakes despite our having been assured that it had learned from past errors and that the art of central banking had been all but perfected. A commodity standard with free banking, and no central bank to distort the financial system, would have avoided such a boom-and-bust credit cycle.
389. U.S. Decapitalization, Easy Money, and Asset Price Cycles
- Author:
- Kevin Dowd and Martin Hutchinson
- Publication Date:
- 09-2011
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- In Matthew 25: 14–30, Jesus recounts the Parable of the Talents, the story of how the master goes away and leaves each of three servants with sums of money to look after in his absence. He then returns and holds them to account. The first two have invested wisely and give the master a good return, and he rewards them. The third, however, is a wicked servant who couldn't be bothered even to put the money in the bank where it could earn interest. Instead, he simply buried the money and gave his master a zero return. He is punished and thrown into the darkness where there is weeping and wailing and gnashing of teeth.
- Political Geography:
- United States
390. Financial Crises: Prevention, Correction, and Monetary Policy
- Author:
- Manuel Sánchez
- Publication Date:
- 09-2011
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- The financial crisis that surfaced in 2007 has stressed the need to identify the ultimate sources of the incentives that were behind the preceding credit and housing bubbles. To lower the likelihood of future financial collapses, prudent economic policies as well as an adequate regulatory and supervisory framework for financial institutions are required. Monetary policy, in turn, should be directed toward price stability, which is a central bank's best contribution not only to long-term economic growth, but also to financial stability.
- Topic:
- Disaster Relief and Monetary Policy
391. Three Narratives about the Financial Crisis
- Author:
- Peter J. Wallison
- Publication Date:
- 09-2011
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- The most important lesson we can learn from the financial crisis is what caused it. Even though the Dodd-Frank Act (DFA) has been signed into law, this is still an important question. If we do not attribute the crisis to the right cause, we could well stumble into another crisis in the future; and if the DFA was directed at the wrong cause, we should consider its repeal. There are several competing narratives. One of them will eventually be accepted, and will determine how the great financial crisis of 2008 is interpreted, and thus how it affects public policy in the future.
- Topic:
- Financial Crisis
392. Supply: A Tale of Two Bubbles
- Author:
- Mark A. Calabria
- Publication Date:
- 09-2011
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- To the extent that monetary policy influences asset prices, it does so via the demand for assets, by changing the borrowing costs to purchase assets, or via supply, where movements in interest rates can make investment in assets look more or less attractive. Fiscal policy interventions can also contribute to bubbles by changing the cost of acquiring specific assets. Most discussions of asset bubbles, particularly those involving the role of monetary policy, focus on demandside factors. This article examines the role of supply-side factors in the recent booms in the U.S. housing market and dot-com stocks. The importance of supply constraints in each market is discussed. Policy implications are then presented.
- Topic:
- Monetary Policy
- Political Geography:
- United States
393. Incentive-Robust Financial Reform
- Author:
- Charles W. Calomiris
- Publication Date:
- 09-2011
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Will Rogers, commenting on the Depression, famously quipped: “If stupidity got us into this mess, why can't it get us out?” Rogers's rhetorical question has an obvious answer: persistent stupidity fails to recognize prior errors and, therefore, does not correct them. For three decades, many financial economists have been arguing that there are deep flaws in the financial policies of the U.S. government that account for the systemic fragility of our financial system, especially the government's subsidization of risk in housing finance and its ineffective approach to prudential banking regulation. To avoid continuing to make the same mistakes, it would be helpful to reflect on the history of crises and government policy over the past three decades.
- Political Geography:
- United States
394. Preventing Bubbles: Regulation versus Monetary Policy
- Author:
- David Malpass
- Publication Date:
- 09-2011
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Over the years, there has been a lot to consider in the Federal Reserve's choices of monetary policy and their relationship to bubbles. My conclusion is that mistaken U.S. monetary policy, usually related to the Fed's indifference to the value of the dollar, has repeatedly caused harmful asset bubbles in the United States and abroad. Policy is again at risk with the Fed's imposition of near-zero interest rates and its decision to conduct large-scale asset purchases (termed “quantitative easing”). Regulatory policy has often been ineffective at identifying or addressing asset bubbles, especially those caused by Fed policy. The solution is a parallel track to improve monetary policy so that it provides a more stable dollar and fewer asset bubbles; and to strengthen regulatory policy so that it provides a more reliable base for growth-creating free markets.
- Topic:
- Monetary Policy
- Political Geography:
- United States
395. 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
396. Milton Friedman's 1971 Feasibility Paper
- Author:
- Leo Melamed
- Publication Date:
- 09-2011
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- The story is fairly well known. In 1971, as chairman of the Chicago Mercantile Exchange, I had an idea: a futures market in foreign currency. It may sound so obvious today, but at the time the idea was revolutionary. I was acutely aware that futures markets until then were primarily the province of agriculture and—as many claimed—might not be applicable to instruments of finance. Not being an economist, the idea was in need of validation. There was only one person in the world that could satisfy this requisite for me. We went to Milton Friedman. We met for breakfast at the Waldorf Astoria in New York. By then he was already a living legend and I was quite nervous. I asked the great man not to laugh and to tell me whether the idea was “off the wall.” Upon hearing him emphatically respond that the idea was “wonderful,” I had the temerity to ask that he put his answer in writing. He agreed to write a feasibility paper on “The Need for Futures Markets in Currencies,” for the modest stipend of $7,500. It turned out to be a helluva trade.
- Topic:
- Economics
- Political Geography:
- New York and Chicago
397. The Need for Futures Markets in Currencies
- Author:
- Milton Friedman
- Publication Date:
- 09-2011
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Under the Bretton Woods system, the central banks of the world undertook to keep the exchange rates of their currencies in terms of the dollar within _1 percent of the par value as determined by the official values of gold registered with the International Monetary Fund. In practice, the central banks generally kept the margins even narrower: _1⁄2 of 1 percent or _3⁄4 of 1 percent. So long as they had confidence that these limits would be maintained indefinitely, persons engaged in foreign trade were subject to negligible risk from fluctuations in exchange rates. Even so, large traders with sharp pencils found it desirable to hedge any future transactions by buying foreign currencies forward to meet commitments coming due or selling foreign currencies forward to match scheduled receipts. These forward transactions were handled by the large commercial banks, often with the active participation of foreign central banks in the forward market.
- Political Geography:
- London
398. Friedman and Samuelson on the Business Cycle
- Author:
- J. Daniel Hammond
- Publication Date:
- 09-2011
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Chicago School economists have come in for criticism since the financial crisis and so-called Great Recession began in 2007. Commentators have blamed recent problems on a laissez-faire faith in the efficacy of markets and simple rules for business-cycle policy—ideas associated with economics as taught and practiced at the University of Chicago. Events over the past four years, we are told, demonstrate the need for a restoration of Keynesian thinking about business cycles and activist government policies to keep markets from failing. However, there is another aspect of Chicago School economics that is commonly overlooked. This is the conviction that economists' understanding of the business cycle is meager in light of the knowledge necessary for activist countercyclical policy to be effective. From this comes the Chicago School concern that economists and policymakers not attempt to do something beyond their capability. Overreaching can make the problems worse.
- Topic:
- Economics and Financial Crisis
- Political Geography:
- Chicago
399. Peddling Protectionism: Smoot-Hawley and the Great Depression
- Author:
- Daniel Griswold
- Publication Date:
- 09-2011
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- Let me preface this review with a confession: As an advocate of free trade, I love to link the 1930 Smoot-Hawley tariff bill with the Great Depression at every opportunity. More than 80 years after its passage, the bill still evokes negative feelings about protectionism. After reading Douglas Irwin's Peddling Protectionism: Smoot- Hawley and the Great Depression, I can see I need to curb my enthusiasm. Irwin does not defend the bill, far from it. He concludes that it failed to achieve its objectives and that it did, in an incremental way, make the Great Depression worse. But in the careful language of the professional economist and historian that he is, Irwin documents in rich and often colorful detail that the most infamous trade bill in American history had less impact than either its advocates or its opponents understood at the time or understand today. Even so, the story of Smoot-Hawley offers valuable lessons for today as our politicians seek to craft U.S. trade policy in the 21st century. Irwin is superbly qualified to write the definitive history of what was officially the Trade Act of 1930. A professor of economics at Dartmouth College, he has authored Against the Tide: An Intellectual History of Free Trade (1996), and Free Trade under Fire (3rd ed., 2009).
- Topic:
- Economics
- Political Geography:
- United States
400. 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