Are you a fan of redistribution? Do you think those with more money should willingly or unwillingly spread the wealth? Do you believe the government should step in and help with the redistribution process? Well, economist Donald Boudreaux has a few questions for you.
Do you teach your children to envy what other children have? Do you encourage your children to form gangs with their playmates to “redistribute” toys away from richer kids on the schoolyard toward kids not so rich? If not, what reason have you to suppose that envy and “redistribution” become acceptable when carried out on a large scale by government?
In the case of the DIA, the city owns the museum and the collection. Hence the question of whether or not art should be sold to satisfy debts. If it were typical separately chartered non-profit institution, this wouldn’t even be a question.
At this point, I’d suggest cities ought to be taking a hard look at whether they own assets like museums, zoos, etc. that should be spun off into a separate non-profit entity. Keep in mind, the tax dollars that support the institutions can continue flowing to it. But this does protect the assets in the event of a bankruptcy.
How many cities own art collections worth potentially billions of dollars? Not too many, I’d suspect. And just what would the motivation be for city governments to reduce assets that could be leveraged in bankruptcy negotiations? What is in the best interest of the institution may not be in the interests of the city government and pensioners.
The DIA might be something like Detroit’s “Get out of Bankruptcy Free” card. (Or if not “free,” then less scathed than otherwise. And that’s not counting the loss of cultural treasures, of course!) But even so it’s a card that can only be played once, and it’s a card that other cities might not have.
In a recent piece for the Wall Street Journal, Emory economics professor Paul H. Rubin makes an interesting argument about the way economists tend to over-elevate and/or misconstrue the role of competition in the flourishing of markets.
“Competition plays a supporting role,” he argues, but “cooperation makes markets thrive”:
The way we use the term competition instead of cooperation fosters anti-market bias. “Competition” carries a negative connotation because it implies winners and losers, and our minds naturally feel sympathy for the losers. But cooperation evokes a positive response: It’s a win-win situation with no losers. And in fact the word competition doesn’t depict market activity as aptly as the word cooperation. The “competitive economy” would be better described as the “cooperative economy.”
Consider the most basic economic unit, the transaction. A transaction is cooperative because both parties gain from a voluntary exchange. There is competition in markets, but it’s actually competition for the right to cooperate. Firms must compete for the privilege of selling to consumers—for the right to cooperate with consumers. Workers compete for the right to cooperate with employers. Competition matters because it ensures that the most efficient players will gain the right to cooperate on the best terms available. But competition plays a supporting role, while cooperation makes markets thrive. (more…)
In yesterday’s edition of The Transom, which I highly recommend, Ben Domenech included a discussion that places the debates over raising the minimum wage within the broader context of the effects of inflation more generally.
Here’s a section:
There shouldn’t be any debate about the reality of the problem that the costs of basic staples, health care, and higher education are chewing up ever-increasing portions of the median family budget which is, in inflation-adjusted terms, smaller than it’s been since 1995. According to the Bureau of Labor Statistics, over the past five years, the average prices for all goods are 7.7% higher; the average price of bread is 10.4% higher; and the average price of meat/poultry/fish/eggs is 16.2% higher. In the past decade, the average worker has paid 89 percent more toward their health care benefits, while their wages grew 31 percent. The rising costs of the government-fueled higher education bubble makes American parents concerned they can no longer afford to send their kids to college. On top of it all, Americans no longer feel confident about their ability to find a new job which can pay them enough to make up for the costs of these goods and services.
The problem is not that the cost of unskilled labor is too low. The problem is the costs of what workers can buy with the fruits of that labor are too high. And the reason for that is largely due to government and systems which socialize risk and insulate producers from reality, not the realities of a competitive marketplace. http://vlt.tc/16×9 Those who favor a free market response to these inequality-related concerns ought to view the minimum wage push as an opportunity to put forward an agenda that speaks to these real concerns with a gas & groceries agenda. This is not going to be solved by more government requirements which raise the cost of labor and will absolutely lead to more low-skilled unemployment: it is with an agenda that would smash the insulated systems which have led to these higher costs.
Ben ends the section with a key question: “Some Republicans have taken up more populist anti-corporatist and anti-cronyist arguments in recent months, because they can read the same polls we do. But will they stand up to cronyism, or are they just interested in demagoguery on the issue until they hold the reins of power again?” (more…)
At the end of a century that has taught that peace is the greatest weapon in development, we cannot afford to spare any effort to bring about a peaceful resolution of such conflicts.
Nor can we allow anything to detract from the urgent need to cooperate in order to ensure that our continent avoids the negative consequences of globalization and that it is able to exploit the opportunities of this important global advancement.
That means working together to ensure that the legacy of underdevelopment does not leave Africa on the margins of the world economy.
That means finding ways to deal with the world’s highest incidence of AIDS, to advance and entrench democracy, to root out corruption and greed, and to ensure respect for human rights.
It means together finding ways to increase the inward flow of investment, to widen market access, and to remove the burden of external debt which affects Africa more than any other region.
It means cooperating to reorient the institutions that regulate the international trade and investment system, so that world economic growth translates into the benefits of development.
It means finding ways of ensuring that the efforts of countries to put their economies on a sound basis in order to uplift their people are not set back by huge flows of finance as they move across the globe in search of quick profits.
The challenge facing today’s leaders is to find the ways in which the prodigious capacity of the contemporary world economy is used to decisively address the poverty that continues to afflict much of humanity.
As I outline in Ecumenical Babel, this kind of a platform for ecumenical engagement of the issues surrounding globalization would have been much more positive, constructive, and promising than the course that was pursued by the mainline ecumenical organizations. Mandela’s words here provide a much more balanced and nuanced assessment of globalization than is often found in ecumenical pronouncements, including the deliberations that ended up leading to the Accra Confession of 2006.
Arguing for the continuing importance of Christian ecumenism, Jordan J. Ballor seeks to correct the errors created by the imposition of economic ideology onto the social witness of ecumenical Christianity .
Your writer possesses well-meaning friends forever vigilant in my best interests. Most recently, one such kind soul sent an email alerting me to the dangers of so-called “dark money” in the political process. Believing himself on the side of the angels – and fully onside with activist nuns, priests and other religious – my friend sought my assistance in the fight against “evil” corporations participating in the political process.
So I got the following in my inbox. And all I had to do for America’s campaign finance salvation was sign a petition circulated by The Daily Kos and People for the American Way:
Bruce, join Daily Kos and People for the American Way in urging the SEC to require that publicly traded corporations disclose their political spending….
The Supreme Court’s Citizens United ruling was a travesty, which has opened the floodgate to corporate money in our political spending. Repealing it via a constitutional amendment will take years, but there’s something we can do in the meantime that will go a long way.
The Securities & Exchange Commission (SEC) is the federal agency with the job of protecting investors from corporate abuse. It is well within its authority to require that publicly traded corporations disclose their political spending—but it won’t happen without a fight.
End the shroud of secrecy. Join Daily Kos and People For the American Way in urging the SEC to require that publicly traded corporations disclose their political spending. (more…)
As the US federal government sidled up to the debt ceiling earlier this week without quite running into it, one of the key arguments in favor of raising the debt ceiling was that it is immoral to breach a contract. The federal government has creditors, both from whom it has borrowed money and to whom it has promised transfer payments, and it has an obligation to fulfill those promises.
As Joe Carter argued here, “Member of Congress who are refusing to raise the debt ceiling (or raise taxes) until their ancillary demands are met are acting immorally, since they are refusing to pay the debts they themselves authorized.”
America has briefly stiffed some of its creditors on at least two occasions.
Once, the young nation had a dramatic excuse: The Treasury was empty, the White House and Capitol were charred ruins, even the troops fighting the War of 1812 weren’t getting paid.
A second time, in 1979, was a back-office glitch that ended up costing taxpayers billions of dollars. The Treasury Department blamed the mishap on a crush of paperwork partly caused by lawmakers who — this will sound familiar — bickered too long before raising the nation’s debt limit.
So if it is immoral to default, then America has done so at least twice. (more…)
“Detroit developed best when it was bottom-up,” says Harry Veryser, economist and professor at University of Detroit Mercy. “When small communities, small parishes, small schools were formed… that’s when Detroit prospered.”
In a recent discussion on what makes cities flourish, Chris Horst and I argued that cities need a unique blend of local community action, good governance, and strong business to thrive. Cities like Detroit have monstrous and complex problems, and the solutions will not come from additional top-down tweaking and tinkering. Rather, any such solutions will stem from complex networks of strong families, life-giving churches, healthy businesses, and intersecting institutions, all of which is furthered when governments rightly relate to their citizens. (more…)
This first appeared in my newsletter, Economic Prospect, in late 2008. Looking back after five years I still like it.
The American failure to save is matched by our insistence on spending to have it all. One part of the problem is the consumer’s love of debt. The other part is the government’s love of debt. Both love debt to enjoy things now and to put off the day of reckoning. How did we get so far from the idea of being content with having enough food, clothing, and shelter?
This is a complex issue based at first in ‘scarcity’ which leads people to create products to fill real needs. When these products are produced people have jobs and can afford more products. Say’s Law says that production creates its own demand.
There comes a point where we move beyond some invisible line and marketing takes over to create imagined needs in people. These needs are filled by more products creating more jobs. This happened after WW2 and made us very prosperous.
Then there is a third stage when the credit industry takes over and tries to convince people to borrow not just for houses or cars (durables) but for anything to enhance their way of life. This started in the 1970s. Consumer debt is $2 trillion but this kind of borrowing creates still more jobs at least for as long as the party lasts.
But the day of reckoning has arrived. Will we get the point and change our behavior? Apparently not. First, the government sold bonds, then raided the trust funds (Social Security), then we borrow to stimulate the economy…then we just borrow without limit.
If Americans are not saving, who will loan us all this money? The answer is the Chinese and Asians who are amazing savers. They will loan us the money. China already owns nearly $2 trillion in U.S. government bonds. This is not a small issue.
Poland’s prime minister, Donald Tusk, announced Wednesday that the government would attempt to cut government debt by taking money from its citizens’ private pension funds. Poland currently has a two-fold pension system: mandatory contributions are made to the state pension fund and then to private funds. It is the state funds, known as ZUS, that the Polish government plans to “transfer” money from. According to Reuters:
…Prime Minister Donald Tusk said private funds within the state-guaranteed system would have their bond holdings transferred to a state pension vehicle, but keep their equity holdings.
He said that what remained in citizens’ pension pots in the private funds will be gradually transferred into the state vehicle over the last 10 years before savers hit retirement age.