"There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen." Frederic Bastiat
As hard as the economic restrictions are in the U.S. due to the pandemic outbreak, other countries are facing even more severe measures. While the U.S. has issued stay-at-home orders, for example, other countries have opted for more extreme quarantines. Want to go for a short walk to stretch your legs, get some vitamin D, and some fresh air? Better head to the grocery store. Otherwise, you may find yourself with a big fine–or, even worse, in jail. In some cities you need a special permit to walk the streets.
A recent article in The Economist raises an important issue with respect to the coronavirus outbreak. A big government may well be needed to fight the pandemic, but how will it shrink back once the pandemic crisis is over? “The state must act decisively. But history suggests that after crises the state does not give up all the ground it has taken.”
In Crisis and Leviathan, Robert Higgs explains how crisis after crisis, the U.S. government increases in either size or regulatory reach. When a crisis occurs, there is a demand for the government to “do something.” Responding to this demand, governments increase their size and regulatory outreach. However, once the crisis is over, spending and regulation do not go back to their initial levels. The result is an increase in government size and regulatory reach from one crisis to the next.
Estoy en Ecuador por el aniversario de los 20 años de dolarización. El IEEP y la Sociedad Bastiat de Guayquil y con el apoyo del American Economic Institute for Economic Research (AIER) entre otros instituto han organizado una serie de eventos. El IEEP, Fundando por Dora “Dorita” de Ampuero fue uno de los institutos claves en promover y defender la dolarización en Ecuador, así como explicar la misma a la sociedad luego de llevar adelante dicha reforma monetaria.
El listado de expositores fue bastante interesante. Ademas de la presencia de Lawrence W. Reed (Presidente de la histórica FEE) y profesores universitarios locales, también estuvieron presentes Carlos E. Gonzales para habla de la experiencia Panameña y Manuel Hinds, “Padre” de la dolarización en El Salvador. Tuvimos la oportunidad de interactuar con varios medios locales, institutos, y hasta con miembros de la Cámara de Comercio de Guayaquil. Entiendo que la experiencia puede ser “acotada” y no representativa de todo Ecuador, no obstante comparto algunas impresiones de este evento.
Argentina is in trouble again. Even after a substantial aid package from the International Monetary Fund (IMF), it is struggling to service its sovereign debt. One should not be surprised: when you keep employing the same policies, you are likely to end up with similar outcomes. This, however, is not the lesson Harvard economist Ken Rogoff draws from Argentina’s experience. Instead, he calls for even more aid flows to Argentina.
Rogoff is right to criticize President Macri’s decision to cut the fiscal deficit gradually, rather than attacking the issue more forcefully early on. That strategy ultimately required Macri to seek help from the IMF. But he is wrong to characterize the Macri tax cuts and liberalization efforts as “Big Bang reforms.” The tax cut was marginal at best. And, while capital controls were lifted under Macri, more comprehensive measures of economic freedom show no significant improvements.
John Papola lo hizo de nuevo. Hace ya cerca de 10 años, Papola produjo una popular serie de "rap videos" capturando un ficticio (pero bastante preciso) debate entre Keynes y Hayek. Ahora, junto al American Institute of Economic Researach (AIER), Papola nos trae un "rap video" donde los contendientes son Mises y Marx.
El debate está contextualizado en torno al debate sobre el socialismo en Estados Unidos. Aquí el video, que parece ya estar ganando popularidad. El video posee subtítulos.
En el video los he visto a Edward Stringhan y Jeffrey Tucker. A quien más (y en que momento del video) encuentran?
The “populist race” in the U.S., a shown by Bernie Sanders’ the plans to eliminate student’s debt.
Senator Bernie Sanders (I-Vt.) recently announced a proposal to eliminate student loan debt. He intends to pay off a total of $1.6 trillion, while financing the expenditure with a new tax on “Wall Street speculation.”
Student debt can be a serious burden for recent grads, especially those who fail to acquire high-paying jobs. And the intention to help those with serious financial burdens is commendable. But eliminating student loan debt would do more harm than good.
The last few weeks have seen a spike in commentaries surrounding modern monetary theory (MMT). A column by Prof. Stephanie Kelton, Andres Bernal, and Greg Carlock at Huffington Post and an endorsement from Representative Alexandria Ocasio-Cortez (D-N.Y.) have triggered negative responses by a number of reputable economists. George Selgin, Larry Summers, Paul Krugman, and Ken Rogoff (just to name a few) have all expressed concerns (to put it mildly) about the implications of applying MMT.
A common thread in these (and other) responses is that it is not clear what MMT really stands for. Advocates of MMT seem to use conventional terms in unconventional ways, and that creates confusion. On top of this, what exactly MMT means changes as time goes by, thereby adding frustration to confusion.
At its core, MMT maintains that a government cannot go broke as long as it can issue its own currency. Large fiscal deficits can be paid for by “printing money” (or, more technically, monetizing deficits). Standard monetary theory maintains that such a policy causes inflation. MMT, in contrast, holds that such a policy is not inflationary, because there are idle resources.
The Sound Money Project
Essay Contest is designed to promote scholarship in monetary and macro-
economics. More specifically, it aims to encourage those working at the
cutting edge of the discipline to consider the monetary institutions
that would reduce nominal disturbances and promote economic growth.
1971, President Richard Nixon ended convertibility, thereby eliminating
the last vestiges of the gold standard. The classical gold standard,
which prevailed from 1873 to 1914, had anchored inflation expectations,
enabled longterm contracting, and promoted international trade. This
historical experience has prompted several reconsiderations of
resumption over the years, including the Gold Commission in 1980, the
International Financial Institution Advisory Commission of 1998, and,
more recently, calls for a Centennial Monetary Commission. What are the
merits of returning to the gold standard? Is such a system feasible
Prizes: First Prize $10,000 Second Prize $2,000 Third Prize $1,000
Winners will also be invited to participate in the Sound Money Project annual meeting in Great Barrington, Massachusetts.
contest is open to graduate students, post-graduates, untenured
professors, and tenured professors from any discipline. Former winners
and current AIER fellows are ineligible. Former entrants are eligible,
but must submit new essays.
must be the sole and original work of the entrant and not previously
published. They should be in the format of a scholarly article. Any
standard citation format (e.g., MLA, APA, Chicago, Harvard, etc.) is
acceptable. Essays may either be written specifically for the contest or
arise from previous work (e.g., term papers, dissertations, research
projects, etc.). Essays shorter than 4,000 words or longer than 12,000
words will not be considered. AIER-affiliated scholars are ineligible.
illustrate the problem, Eichengreen offers three scenarios. In the
first scenario, a cryptocurrency issuer maintains 100 percent dollar
backing for coins in circulation. This is similar to how a currency board
works. Since such an arrangement requires the issuer attract and hold
dollars in order to expand the supply of coins, the cryptocurrency will
not be subject to a speculative attack. However, this also means the
issuer cannot invest those dollars since it must hold all of them to
back the cryptocurrency.
to earn interest on the float, a cryptocurrency issuer would find it
challenging to profit while holding 100 percent dollar reserves. It
would also struggle to offer a competitive return and, hence, attract
customers. Why would one exchange a widely used dollar for an illiquid
cryptocurrency, which is harder to use and does not offer a competitive