Archive for May, 2012

Recently I found this rather intelligent discussion of inequality issues in the United States. John Stossel talks with Deroy Murdock and Arthur Brooks:

What we have to worry about is mobility, not inequality.

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The other day I had an interesting discussion about the European Fiscal Compact and its Article 11 in particular:

With a view to benchmarking best practices and working towards a more closely coordinated economic policy, the Contracting Parties ensure that all major economic policy reforms that they plan to undertake will be discussed ex-ante and, where appropriate, coordinated among themselves. Such coordination shall involve the institutions of the European Union as required by European Union law.

As far as I read this, Article 11 puts an end to each signatory state’s sovereignty. If a country can no longer pass ‘major economic policy reforms’ without agreement by other states, this constitutes a significant lack of independence. However, my colleague argues Article 11 is (a) too vague and (b) does not differ too much from previous European agreements.

That did not set my mind at rest. So what do you think?

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Maybe the best thing you can say about the current “Occupy” movements is that they have good intentions. But if this true, I would immediately recall Bernard of Clairvaux’s famous phrase “The road to hell is paved with good intentions.

A much more precise description of the protesters might be to call them naive. In a recent article for the Jewish World Review, Thomas Sowell expands on that:

The Moral Infrastructure

If in fact 99 percent of the people in the country were like these “Occupy” mobs, we would not have a country. We would have anarchy.

If the “Occupy” movement, or any other mob, actually represents a majority, then they already have the votes to accomplish legally whatever they are trying to accomplish by illegal means.

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A few days ago the European Union published its updated economic forecast. All in all, the outlook is far from sunshine and roses:

The EU economy is estimated to be currently in a mild recession.

The picture presented in the interim forecast in February is broadly confirmed for 2012, with real GDP projected to stagnate in the EU and to contract by -0.3% in the euro area. For 2013, growth is forecast at 1.3% in the EU and 1.0% in the euro area.

Looking at the detailed statistics, we find huge cross-country differences in per capita income growth. Furthermore, we see that the EU had to lower its forecast for 2012 by about 0.7 percentage points: instead of 0.4% growth, per capita income is now expected to fall by 0.3% this year. With these adjustments we also observe severe cross-country differences. Slovenia’s per capita GDP forecast changed from +0.8% to -1.6%, while Germany’s outlook only changed from 0.9% to 0.6%.

The question is, do these tiny differences actually matter? Does it make a big difference whether a country’s GDP per capita grows by, say, 1.0% or 1.5%?

The answer is simple: Differences in growth rates do matter. And they matter a lot.

Consider the following illustrative example: Suppose we have six countries with a per capita income of 100 in the year 1960. What would have happened to their GDP per capita if they had grown at different rates?

Different growth paths

The figure reveals the striking impact of differences in growth rates. While all countries started at a level of 100, the richest would now have 465 while the poorest country is still at 130.

So, what is the lesson here?

If the EU lowers its economic forecast by 0.7 percentage points, that is certainly not a minor adjustment. Although it may not have a huge impact for one year, it certainly affects long-term prosperity.

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Recently, I found this interesting video in which William F. Buckley and Nobel laureate Milton Friedman discuss the idea of a negative income tax:

In a period of unprecedented prosperity and affluence the number of the people on welfare is skyrocketing. Why?

Because once they get on, we make it almost impossible for them to get off.

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Random collection of quotes on politicians:

Ernest Benn:

Politics is the art of looking for trouble, finding it whether it exists or not, diagnosing it incorrectly, and applying the wrong remedy.

Groucho Marx:

Those are my principles.  If you don’t like them, I have others.

Dick Armey:

Three groups spend other people’s money: children, thieves, politicians. All three need supervision.

Will Rogers:

The more you read and observe about this Politics thing, you got to admit that each party is worse than the other.  The one that’s out always looks the best.

Joseph Sobran:

The difference between a politician and a pickpocket is that a pickpocket doesn’t always get indignant when you tell him to keep his hands to himself.

Politicians never accuse you of  ‘greed’ for wanting other people’s money — only for wanting to keep your own money.

Mark Twain:

Reader, suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself.

Henry Cate VII:

The problem with political jokes is they get elected.

Thomas Sowell:

There is nothing that politicians like better than handing out benefits to be paid for by someone else.

In politics, the truth is strictly optional and that also seems to be true in parts of the media.

You have to have a sense of humor if you follow politics. Otherwise, the sheer fraudulence of it all will get you down.

If politicians stopped meddling with things they didn’t understand, there would be a more drastic reduction in the size of government than anyone in either party advocates.

Charley Reese:

Experience to a politician is like experience to a prostitute — not much to recommend them.

Ronald Reagan:

Politics is supposed to be the second oldest profession.  I have come to realize that it bears a very close resemblance to the first.

Milton Friedman:

If you really want to engage in policy activity, don’t make that your vocation.  Make it your avocation.  Get a job.  Get a secure base of income.  Otherwise, you’re going to get corrupted and destroyed.

source: Freedom Keys

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Back in 2007, Judge Andrew Napolitano gave a speech on the fundamentals of the U.S. Constitution. A video you shouldn’t miss:

In virtually every administration […] the government has sought ingenious ways to evade and avoid its obligations under our founding charter.

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For the National Review Online, James C. Capretta takes a look at President Obama’s economic policies as well as his plans for a second term:

The President’s Incoherent Economic ‘Philosophy’

The federal government has steadily become more and more involved in elementary and secondary education since 1965. There’s not a shred of evidence that it has helped raise educational performance by students. On the contrary, the steady encroachment of federal regulations and spending in education has coincided with an erosion of the nation’s standing relative to that of our peers around the world.

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Nobel laureate Milton Friedman talks about monetary policy and government stimulus. Thirty years old, but as relevant as ever:

When you start inflating the good effects come first, and the bad effects come later.

If you slow down inflation the bad effects come first, and the good effects come later.

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