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OpenMarket: Business and Government

  • Virtuous Capitalism in Theory and Practice

    November 17, 2015

    Government is responsible for billions and billions of dollars of corruption and corporate welfare. Considering the potential returns on investment compared to honest entrepreneurship, it is a minor miracle the vice-to-virtue ratio in the economy isn’t even worse than it already is. Why is that? CEI founder Fred Smith and I wrote a recent paper, “Virtuous Capitalism,” which explores several possible answers to the question.

    If you don’t have time to read the whole thing, Fred summarizes it in his most recent Forbes column, to which I contributed:

    Capitalism has a bad reputation. Many people see it as corrupt, uncaring, and in bed with politicians. And popular wisdom isn’...

  • Sell a Kidney, Save a Life

    November 2, 2015

    Last week I blogged about the idea that some things should not be part of a market economy, and highlighted one rather silly example of a particular item being outlawed: in that case, futures contracts in onions. But there are far more serious examples of policymakers forbidding commerce in specific goods with disastrous results, in particular human organs like kidneys.

    The same day I wrote about onions, Shmuly Yanklowitz wrote in The Atlantic about the advantages we could see from allowing a market in “compensated donation” of kidneys. Yanklowitz has an unusual perspective, being the founder of a social welfare nonprofit organization as well as someone who has recently given an...

  • Virtuous Capitalism, or, Why So Little Rent-Seeking?

    October 20, 2015

    The venerable Fred Smith and I have a new paper out today. Click here to read it. In the paper, we try to solve the Tullock Paradox, named for the late, great economist Gordon Tullock (my remembrance of him is here).

    What is the Tullock Paradox? It involves rent-seeking, or seeking special favors from the government. Bailouts, subsidies, and regulations that prevent competition are all examples of rent-seeking. To provide some context, lobbying is roughly a $3.5 billion industry, and the federal government doles out more than $100 billion in corporate welfare—meaning rent-seeking is potentially a 30-fold investment. Not 30 percent, 30-fold. Meanwhile, the Dow Jones averages an 8 percent return. With such outlandish returns on investment, the Tullock Paradox...

  • ABI MillerCoors Merger Won't Harm the Craft Beer Movement

    October 14, 2015

    The folks at Food & Water Watch are pissed. And I don’t mean “pissed” as in drunk; they are mad as hell about the proposed merger between two big breweries and demanding the Department of Justice step in and block the deal. Despite the fact that big breweries have been merging and acquiring bits and pieces of each other for decades, F&WW believes that allowing Anheuser-Bush InBev to acquire SABMiller would bring about an end to this golden age of beer we’re currently enjoying. My advice to them is to crack open a beer and take a deep breath.

    After months of negotiation, Anheuser-Busch InBev (purveyor of Budweiser, Stella, and now Corona) announced it had reached an agreement to acquire...

  • Betting on the Future: 25 Years Later

    September 29, 2015

    Today is the 25th anniversary of the famous bet between economist Julian Simon and biologist Paul Ehrlich over the price of five metals: chromium, copper, nickel, tin, and tungsten. The bet has become legendary over the last quarter century because it stands as a proxy for two very different views: one that is optimistic about the future of the world and the ability of human beings to make life better, and one that is profoundly...
  • Free Enterprise: Sometimes We Forget

    September 28, 2015

    When we find ourselves debating specific issues having to do with economics and business, we often forget how overwhelming the evidence is for the superiority free markets in general. Whether it’s our friends at a place liked AEI—“Take a bow, capitalism — nearly 1 billion people have been taken out of extreme poverty in 20 years”—or celebrities like U2 front-man Bono—“Capitalism takes more people out of poverty than aid”—it’s very clear that a free, productive economy brings the prosperity that alternate systems have consistently ...

  • World Bank Increases Number of Poor

    September 25, 2015

    The World Bank is considering changing its definition of what constitutes extreme poverty, raising the level below which someone is treated as extremely poor from $1.25 a day to $1.90 a day. This comes after a long trend of people moving out of the category, leading some to point out that the Bank may have an interest in maintaining high numbers of people defined as poor.

  • A First Look at Markets without Limits

    September 10, 2015

    Georgetown University professors Jason Brennan and Pete Jaworski (left) have a new book out with a fascinating premise: anything that it is morally permissible to do in the absence of...
  • More Punishment for Thrifty Seniors from Federal Medicare Laws

    September 2, 2015

    If two couples make almost the same amount of money, should one of them be charged $2,000 more in Medicare Part B premiums? Logically, no, but to the federal government, the answer is sometimes “yes.” This problem will get worse in 2016, and much worse by 2018.

    Under federal law, an elderly couple can be charged thousands extra annually for Medicare premiums if their income goes up by just a few dollars (which can occur because they saved their money, and thus have more savings account interest or investment income). That’s because Medicare premiums suddenly jump by big amounts at certain income levels, rather than rising gradually the way your taxes do when your income rises.

    Now, these arbitrary income cliffs will get even worse due to a quirk in federal law. As the Fiscal Times ...

  • Feds Double Down on Failed Affordable Housing Mandates

    August 21, 2015

    Federal affordable housing mandates do little to increase homeownership rates, but they did help cause a devastating financial crisis in 2008 by encouraging risky lending.

    Yet the Federal Housing Finance Agency is doubling down on failure by ratcheting up those mandates. Its head, Mel Watt, was appointed by the President in 2013, even though the policies he promoted in Congress helped cause the financial crisis.

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