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’...
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...
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...
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...
September 29, 2015
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 ...
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.
September 10, 2015a new book out with a fascinating premise: anything that it is morally permissible to do in the absence of...
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 ...
August 21, 2015
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.